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12-13-2011, B5 CHINATOWN REAL PROJECT
FM—eeung Date 12-13-201 1 Item Number Counci lj acEn6a uepoR t C I T Y O F S A N L U I S O B I S P O FROM : Katie Lichtig, City Manage r Christine Dietrick, City Attorne y Michael Codron, Assistant City Manage r Prepared by : Claire Clark, Economic Development Manage r SUBJECT : APPROVAL OF AGREEMENTS FOR THE PURCHASE AND SALE O F PROPERTY BETWEEN THE CITY OF SAN LUIS OBISPO AND SL O CHINATOWN, LLC REGARDING THE CHINATOWN PROJECT . RECOMMENDATION S 1.Approve the Purchase and Sale of Real Property with SLO Chinatown, LLC (hereinafte r "Copeland") related to the Chinatown project, contingent upon a finding of General Pla n conformity by the Planning Commission ; an d 2.Authorize the Mayor to execute agreements, as well as associated leases and othe r documents (hereinafter "Agreements") required to formalize the transactions on the terms and conditions approved, in substantially the form presented to Council, subject to fina l approval by the City Attorney of any modifications directed by Council ; and 3.Authorize the City Manager to execute escrow documents on behalf of the City ; an d 4.Direct staff to return to Council to consider and take action on the Plannin g Commission's determination in the event that the Planning Commission does not find th e transactions conform to the General Plan, an d 5.Approve an automatic extension of the Third Modification to the Option Agreemen t (hereinafter "Option") to suspend expiration of the Option until such time as Council ha s had the opportunity to consider and take action on the Planning Commission's determination only in the event that the Planning Commission does not find th e transactions conform to the General Plan . REPORT-IN-BRIE F The purchase, sale and lease transactions that are the subject of this report move the City an d Copeland closer to realizing the Chinatown Project . Originally envisioned over a decade ago , the project approvals call for hotel, retail, office and housing on the site that consists o f properties that front on Monterey Street as well as properties fronting Palm Street at the corner o f Morro Street . In order to proceed with the project, the exchange of properties between the Cit y and Copeland, as envisioned in the previously approved environmental and developmen t approvals is required . Some of the properties are owned by the City and others owned b y Copeland as shown on the Vicinity Map (Attachment 1). Chinatown Project Purchase Agreements Page2 Under consideration is phasing of the project and payment terms for the City property that is par t of the Chinatown Project . The price for the land was established in 2008 . Phasing of both construction and payments are proposed in accordance with the following terms : •Phase the development by separating the Monterey frontage from the Palm hote l development site to facilitate development of the Monterey frontage while retaining Cit y ownership of the Palm frontage . •Sell the Monterey parcels to Copeland following subdivision of the City property fo r 60% of the $1 .1 million purchase price . In addition, receive payment of the mitigation fe e for removal of public parking in accordance with the EIR for parking actually remove d due to the construction of buildings on the Monterey parcels and construction of parkin g on the Yung parcel . •Purchase the Yung parcel from Copeland for the nominal price of $1 and incorporate i t into the parking lot . Demolish the Yung building at Copeland's expense . •Reconfigure the parking lots at Copeland's expense so that exits as well as entrances ar e on Palm Street . •Maintain parking in the upper portion of the parking lots until the hotel is built . Continue to collect all City parking revenues from the reconfigured parking until hotel constructio n begins . •Resolve the potential suit between Copeland and the City related to the construction o f the 919 Palm Street structure . •Sell the Palm development site to Copeland for the remaining 40% of the purchase pric e providing prerequisites have been met, in no longer than eight years, with conditions tha t require the hotel to be completed within approximately ten years . Receive the balance o f the mitigation fee for removal of public parking in accordance with the EIR . •Sell the Yung parcel back to Copeland for $1 at the time the Palm hotel development sit e is transferred to Copeland . California Government Code Section 65402 requires that a public agency cannot acquire o r dispose of public property unless the transaction is determined by the planning agency (in thi s case, the Planning Commission) to be consistent with the General Plan . The propose d transactions will be considered by the Planning Commission on December 14, 2011 . The staff report for the Planning Commission item will be forwarded to Council and available to th e public prior to Council's consideration of this item . The sale of the City property has bee n contemplated and incorporated into the project description since the inception of the Chinatow n proposal, however, the purchase of the Yung parcel has not been reviewed previously . In th e event that the Planning Commission does not find the proposed transactions consistent with th e General Plan, the issue will return to the City Council for further consideration . DISCUSSIO N Backgroun d Initial Vision for Monterey and Palm Street Revitalization .In 1999, Copeland presented a conceptual proposal to the City and the community entitled,Chinatown-Court Street : A Visio n for the Future of Downtown San Luis Obispo California Inspired by its Past (Council Readin g File). This initial vision contemplated the development of public and privately owned surface Chinatown Project Purchase Agreements Page3 parking lots . The vision included construction of the Court Street project on the surface parkin g lot at Court Street, development of the 919 Palm Street parking structure and offices, an d development of the Chinatown Project on the surface parking lots between Palm and Montere y Streets . Since that initial vision, both the Court Street and 919 Palm Street projects have been completed . Court Street has been operating since 2006 with a variety of successful retail and office tenants . The 919 Palm parking garage and office building was also completed and occupied in 2006 . Both Court Street and 919 Palm have added to the vitality of the Downtown by expanding office , retail, and restaurant uses, adding off street parking, inspiring adjacent improvements along th e Court Street paseo, and providing improved City services through the co-location of th e Community Development Department and the Public Works Department in the ground-floo r office at 919 Palm . From the beginning, and as it remains today, the sale of City land isn't merely a land transaction . It is a public-private partnership that seeks to maximize specific public benefits that are achieve d only through development . The public benefits have long been incorporated into City policy including : •The commercial core is a preferred location for retail uses that are suitable for pedestria n access, off-site parking, and compact building spaces .' •There should be a diversity of parking opportunities . Any major increments in parkin g supply should take the form of structures, located at the edges of the commercial core, s o people will walk rather than drive between points within the core .2 •Rehabilitation and seismic strengthening of Downtown historic propertie s •Increased retail floor area, including multi-story retail .3 •Directly implements specific and identifiable City objectives, as set forth in the Genera l Plan, the Conceptual Plan for the City's Center, the Downtown Strategic Plan and othe r key policy documents .4 •The City should emphasize conference and visitor-serving facilities which have a lo w impact upon the environment and upon existing land forms and landscapes, and whic h provide low-impact visitor activities and low-impact means of transportation .5 Each of these policies helps to inform the decision-making process for the originally envisione d development and continue to apply to the final piece, the Chinatown Project . Chinatown Option .The initial Chinatown Option Agreement (the Option) grew out of th e Purchase Agreements approved by Council in 2003 for the Court Street and 919 Palm Stree t parking/office development projects . The Option stated the terms for the purchase and sale o f City parking Lots 3 and 11 plus the building and parking located at 955 Morro on the bloc k bounded by Palm, Mono, Monterey, and Chorro Streets . Land Use Element Policy 4 .1 2 Land Use Element Policy 4 .1 0 3 Land Use Element Policy 4 .16 .4 ' Ibi d 5 Land Use Element Policy 3 .5 .1 Chinatown Project Purchase Agreements Page 4 The Option has been amended three times since 2003, in each instance to extend the term of th e agreement and respond to the changing conditions affecting the viability of the project . Presently, the Option only allows Copeland to purchase the entire property from the City, an d only if specific conditions have been met . Proposed Purchase Agreements for Chinatown .In 2011, Copeland informed the City that th e conditions required to purchase the City's parking lots could not be met for the hotel portion o f the Chinatown project, but a part of the project could move forward along the Monterey Stree t portion of the site . As a result, the City Council authorized staff to pursue negotiations for a phased implementation of the Chinatown project that would allow the Monterey Street portion o f the Chinatown project to be developed . The transactions that are the subject of this report ar e intended to finalize the terms of the transaction and allow the Chinatown project to mov e forward as a phased project . Under the proposed terms, ownership of the hotel portion of th e project site would be retained by the City until hotel construction is ready to move forward an d all of the City's conditions can be met . The Phased Approach and Term s Phased Projec t On May 17, 2011, the City Council gave staff direction to pursue a phased implementation of th e Chinatown project to increase vitality along Monterey Street as soon as possible, whil e preserving City ownership of the hotel site . Given the recession's effect on the economics o f hotels, phasing the project gives the developer and the City an opportunity to facilitate near ter m downtown vitality while preserving parking until the hotel site can be developed . Because the transaction involves the sale and purchase of city-owned real property, the Cit y Council has met in closed session as authorized under the Ralph M . Brown Act on severa l occasions to provide direction to its negotiating team . Staff was given negotiating parameter s for the terms of the phased real estate transaction that separated the portion of City propert y fronting Monterey Street from the portion that fronts on Palm Street as shown on the Existing Site Plan (Attachment 2). Staff returned to closed session at later meetings and informe d Council of the outcomes of those real estate negotiations and received further direction t o prepare agreements reflecting the terms negotiated and to return to Council during open sessio n with proposed agreements for the purchase and sale of properties in the Chinatown project unde r the phased approach . Under the proposed agreements, new construction on the Monterey frontage will be pursued wit h all due diligence and shall be substantially complete within four years of conveyance of th e Monterey parcels . The look, feel, scale and components of the currently envisioned project wil l be substantially similar to the entitled project, but may require City review of changes to facade s and interior tenant improvements . Table 1 highlights the changes between the entitled Chinatow n project and the revised project that is the subject of the proposed agreements . Chinatown Project Purchase Agreements Page 5 Table 1 . Council Approved Project reflected in Option Agreement Project (approximate ) Hotel Rooms 78 7 8 Housing Units 16 @ 19,161 sq . feet 32@ 15,350 sq . feet Retail 46,450 46,14 0 Retail in Hotel 4,700 sq . feet 4,700 sq . fee t Office 5,630 0 Total Square Feet 71,241 61,490 General Plan Conformity California Government Code Section 65402 requires that a public agency cannot acquire o r dispose of public property "...until the location, purpose and extent of such acquisition or disposition ...have been submitted to and reported upon by the planning agency, as to conformit y with said adopted general plan ..." The sale of the City property has been contemplated an d incorporated into the project description since the inception of the Chinatown proposal and th e use of the City property, as currently entitled, has been considered by both the Plannin g Commission and the Council on multiple occasions . However, the purchase of the Yung parce l has not been reviewed previously . Both the proposed purchase of the Yung parcel and the sale of the City property will b e considered and reported upon by the Planning Commission on December 14, 2011 . The staff report for the Planning Commission item will be forwarded to Council and available to th e public prior to Council's consideration of these proposed transactions . Council authority t o execute agreements to acquire or dispose of the properties that are the subject of this report mus t be contingent upon a favorable determination by the Planning Commission . The Commission's Conformity Report will be forwarded to the Council prior to execution by the Mayor of an y agreement to acquire or dispose of property . In the event that the Commission does not find th e proposed property transactions in conformity, the item will be returned to Council . Because th e return to Council would occur after the expiration of the current option, staff recommends tha t Council authorize the automatic extension of the current option agreement to accommodate th e return to Council, if further Council action should become necessary . Financial Terms and Condition s Purchase Price, Parking Mitigation Measure Fees and Yung Parcel Purchas e The purchase price for the City property, as specified in the Option, is $1 .1 million, plus simpl e interest of one percent per year . Payment of this purchase price is proposed to be phased alon g with the development, giving the City 60 percent of the purchase price with the conveyance o f the Monterey parcels . The remaining 40 percent is to be paid at the time of conveyance of th e Palm development site, if and when the conditions are met for the hotel to move forward . The parking mitigation fee for removal of public parking spaces continues to be a part of th e terms, consistent with the amount set out in the Option and in the EIR. The mitigation fee i s based on the 2008 in-lieu parking fee adjusted for inflation, currently set at $17,796 per space . It Chinatown Project Purchase Agreements Page 6 is proposed that Copeland would pay this amount for each space lost with development of the Monterey Street portion of the project . The exact amount per space will be determined by th e timing of the payment, as the fee is adjusted annually for inflation . A new term within the proposed agreement is City ownership of the Yung parcel, currentl y owned by Copeland . The 3,780-foot rectangular parcel is located at 861/863 Palm Street, and i s occupied by a vacant unreinforced masonry building subject to a July 1, 2015 deadline fo r abatement of the hazard . The negotiated terms include conveyance of the Yung parcel to th e City for the nominal price of one dollar . Copeland will undertake demolition of the unreinforce d building and construction of additional parking spaces in its place . The demolition in conjunction with construction of the project has always been contemplated . However, under the phase d iteration of the project, sixteen new surface parking spaces are estimated to be sited on the Yun g parcel . All costs of demolition and parking reconfiguration will be borne by Copeland . In the future, when the conditions are met and a hotel project is able to move forward on the Pal m Street parcel, the City will sell the Yung parcel back to Copeland for one dollar . If Copeland i s unable to proceed with the hotel project the Yung parcel will remain part of the City's real estat e holdings permanently . Conveyances and Site Developmen t Phasing of the project as proposed will require a subdivision of the parking lots so that th e Monterey portions can be sold separately from the Palm portions, which will be retained a s public parking . Upon completion of the subdivision, the City will convey to Copeland th e Monterey parcels . At that time, Copeland will pay the first phase of the purchase price and wil l pay the mitigation fee for the net public parking spaces removed as a result of the Montere y phase of the project . This amount will reflect the actual number of spaces lost via th e reconfiguration and closure of the Monterey parcels, estimated to be 40 spaces . The balance of the purchase price (plus 1 percent interest) and payment of the remaining mitigation fee fo r removal of public parking will occur upon conveyance of the Palm development site as furthe r discussed in this report . Parking Reconfiguration As a consequence of construction on the Monterey parcels, continued use of parking lots 3 an d 11 requires these parking lots to be reconfigured . In addition to the creation of new parkin g spaces on the Yung parcel, Copeland will reconfigure the public parking lots to allow for vehicl e and pedestrian circulation as shown on the Interim Parking Plan (Attachment 3), with ingress an d egress at Palm Street . Copeland shall incur all costs associated with the reconfiguration of th e parking lot and will supply and install the meter poles for meter heads owned by the City . Copeland has provided a reconfiguration plan for the parking lot that meets the City's standard s for vehicular and pedestrian circulation . The current lot has three entries on Palm Street and tw o exits on Monterey Street . The lot reconfiguration will result in two entries and one exit, all o f which are on Palm Street . Consideration was given to a secondary exit on Morro Street, by th e old Public Works building, but it was determined that existing adjacent uses and easements mak e this exiting infeasible . Parking lot reconfiguration is expected to begin with demolition of the Yung building an d portions of the concrete islands within the parking lot . Upon completion of this work, the Chinatown Project Purchase Agreements Page 7 parking lots with egress onto Monterey Street will reopen for use until construction is ready t o begin on the Monterey parcels, in approximately twelve months . The City will continue to operate and collect revenue from parking on the entire site even afte r conveyance of the Monterey parcels, pursuant to a lease agreement between the City an d Copeland . The City will own and operate the parking on the Palm development site, includin g the parking on the Yung parcel, until hotel development is initiated and the Palm developmen t site is conveyed to Copeland . Hotel Development on the Palm Development Sit e Under the current entitlements, the Chinatown project includes a downtown hotel consisting o f 78 rooms and meeting spaces, restaurant and associated retail . This element continues to be par t of the proposal, but the timing of development of the hotel has been affected by the recession . A s a result, the negotiated terms provide for delayed construction of the hotel . As proposed, the hotel construction drawings must be submitted seven years from the date of execution of th e purchase agreement for the Monterey parcels . Failure to do so will result in Copeland forfeitin g the right to acquire the Palm development site and forfeiture of the right to reacquire the Yun g parcel from the City . City's Right of Reverter on the Palm Development Site The City will retain the right to take the Palm development site back from Copeland i f construction does not commence within six months of construction permit issuance or if th e project begins construction, but fails to be diligently pursued to completion . If this right i s exercised by the City after transfer of the site, the phased purchase price of $440,000 plu s interest will be refunded to Copeland and, in the event the public parking is still in place, th e mitigation fee for removal of public parking associated with the Palm development site shall als o be refunded to Copeland, but the City will retain title to the Yung Parcel . Conditions Precedent to Conveyance of the Palm Development Site to Copelan d Several conditions must be met prior to the conveyance of the Palm development site t o Copeland . These prerequisites are consistent with those enumerated in the Option and endeavo r to insure that the development occurs following conveyance . The prerequisites (to be verified b y the City prior to conveyance) include evidence that : 1.Copeland has obtained building and other permits for construction of the Projec t and permits have not expired ; 2.Copeland has provided documentation to the City of financial resources in a sufficient amount to complete the construction and equipping of the Project ; 3.Copeland has entered into construction contracts for the Project evidencing tha t the work of construction be completed within the budget ; and 4.Copeland has a binding contract with the operator, if any, of the complete d Project . Termination of Agreement to Sell the Palm Development Sit e The City may terminate the agreement to sell the Palm development site, including the Yun g parcel, to Copeland if : Chinatown Project Purchase Agreements Page 8 1.Construction on the Monterey parcels is not substantially complete within fou r years of the conveyance of the Monterey parcels ; or 2.Copeland has not submitted construction plans to the City for development of th e Project on the Palm development site within seven years from the date of th e execution of the purchase agreement for the Monterey parcels . Lease of 955 Morro (Old Public Works building ) In order to have a City-owned asset put to productive financial use at no cost to the City and unti l such time as the Palm development site is conveyed to Copeland the City intends to lease the 95 5 Morro building to Copeland . Copeland will pay nominal rent of $500 per month under the term s of the proposal because Copeland will be responsible for upkeep, maintenance and insurance o n the building . Sublease revenue in excess of nominal rent and expenses will be evenly spli t between Copeland and the City . Copeland will consult with the City about potential tenants, but Copeland will have control and sole discretion on tenant selection consistent with applicabl e zoning and other City laws and regulations . The parking adjacent to 955 Mono, currently use d for City vehicles, will continue to be used by the City until the Palm development site i s conveyed to Copeland . Payment for Un-met Parking Deman d This project shall be subject to the City's normal rules for providing parking or paying an in-lie u fee for parking that is not provided . In keeping with the entitled project, an in-lieu fee fo r parking is required for all un-met parking demand within each phase of the project . This projec t is also subject to parking mitigation fees in accordance with the EIR due to the removal of publi c parking at Lots 3 and 11, as described in prior paragraphs . To be clear, the in-lieu fee and th e parking mitigation fees are completely separate . As such, it is certain that Copeland will pay th e parking mitigation fee and, in addition, will pay parking in-lieu fees as dictated by the City's generally applicable rules as applied to the project ultimately constructed . Resolution of Claim for 919 Palm Street Building Construction The final payment request from Copeland for the construction of the 919 Palm Street parkin g garage and offices included significant costs in excess of the fixed construction price . Th e pending claim totals approximately $3 Million . As part of the consideration for the agreement s proposed, for the Chinatown project, Copeland has agreed to waive its right to pursue any an d all claims or legal action related to the construction of 919 Palm Street structure . Next Step s The phased approach requires a series of steps leading to conveyance of the parcels between th e City and Copeland . The first of these is a general plan conformity report by the Plannin g Commission and approval and execution of the Purchase and Sale Agreements (Attachment 4), for the three sites (the Monterey parcels, the Yung parcel, and Palm Street hotel site). There are other associated leases and a waiver that must also be executed if the terms of the transaction s are approved by the Council . If the transactions are approved and Agreements are executed, th e first step is subdivision of the City property into separate parcels : the Monterey parcels and th e Palm development site . The subdivision will be accomplished via a public subdivision or othe r appropriate application for the division of the property . The application will be subject to standard review processes, but will be facilitated by a consultant, the costs of which will be pai d for by Copeland . Once the subdivision is complete, the City will convey the Monterey parcels to Chinatown Project Purchase Agreements Page 9 Copeland and Copeland will convey the Yung parcel to the City in accordance with th e agreements . Within the thirty days following conveyance of the Monterey parcels, Copeland will mov e forward with the Monterey Street portion of the development starting with seismic strengthenin g of the Blackstone Hotel, Sauer Bakery, and Muzio building . In addition, the Yung building wil l be demolished and the parking lot reconfiguration will be started, subject to permittin g requirements . While the seismic strengthening work and reconfiguration of parking lots is occurring, Copelan d will prepare and file permit requests for the new Monterey street buildings . Upon approval o f these permits, Copeland will close the Monterey parking lot egresses and will begin constructio n of the new buildings on the Monterey parcels . During and after development of the Monterey portion of the project, the reconfigured parkin g lots 3 and 11 will be in continuous operation . This will be the case until construction begins o n the Palm development site . FISCAL IMPAC T The intent of this transaction is to revitalize the downtown via a public-private partnership tha t seeks to maximize public benefits achieved. As outlined below, there are significant fisca l benefits to the City from the project . Over time, the General Fund is expected to benefit fro m increased Sales Tax, Property Tax, and Transient Occupancy Tax revenues upon occupancy . The Parking Fund will also benefit from the parking mitigation fees, as well as ongoing revenue s from parking operations until the Monterey Parcel and the Palm Development Site are conveye d to Copeland . Once fully implemented, the project will benefit the City by approximately $3 .9 million in one - time revenue and $500,000 annually in net-new tax revenue . Of the one-time revenue, the $1 .1 million purchase price will be allocated to the General Fund . The Parking Fund will benefi t from the payment of the parking mitigation fee (projected to be $2 .8 million) for the removal o f 155 public parking spaces currently in service on Lot 3 and 11 . The Parking Fund will also realize ongoing parking revenues from the remainder portions of Lots 3 and 11 until those lot s are conveyed for purposes of developing the Palm Development Site (estimated to be $1 .7 million). The following Fiscal Summary provides this information in an accessible format . Chinatown Project Purchase Agreements Page 1 0 Fiscal Summary Monterey Parcels Palm Development Site One-Time Revenu e Purchase Price ($1,100,000 ) Interest from July 3, 2008 – July 2, 201 1 Estimated interest from July 3, 2011 to land transfe r Tota l Credit for Payments Balance due on Monterey conveyance Mitigation Measure Fee for Removal of Publi c Parking (estimated using current fee levels@ $17,79 6 per space) $660,00 0 $19,800 tbd @ 1%simpl e interest per yea r $679,80 0 ($265,500 ) $414,30 0 $711,840 $440,00 0 $13,200 tbd @ 1%simpl e interest per yea r tbd $2,046,54 0 Total One-time Revenues $3,891,380 plus interest Revenue from Parking Meters Parking revenues for 43 meters for one year at $1,82 1 per space (based on current parking meter rates fo r credit card meters .) on Monterey Parcels $78,30 3 Revenue on Palm Development Parking revenues for 115 meters for eight years a t $1,821 per year per space (based on current parkin g meter rates for credit card meters .) Site $1,675,320 General Fun d The phased project produces revenues for the City at a more measured pace than anticipate d previously . The assumptions in the Annual Revenue Comparison (Attachment 5) show th e difference between the phased approach and the project coming on-line all at once . Annual net new revenue to the General Fund of approximately $502,200 is projected once the project is full y implemented . In comparison, the Council-approved project estimated new net revenue to th e General Fund of approximately $614,300 . The difference is primarily due to lower roo m revenues for the hotel and lower property tax expectation, both due to the effects of the grea t recession of 2008 . General Fund Revenue Council Approved Project Proposed Projec t Sales Ta x Property Tax Transient Occupancy Tax $106,300 $81,300 $426,700 $112,10 0 $73,80 0 $316,30 0 Total $614,3001 $502,20 0 The assumptions made in the five-year financial forecast show revenue from the projec t beginning in 2015-16 with annual sales tax revenues of $197,200 and TOT revenues o f $485,000 . These projections will be revised according to the terms of the proposed agreement, i f Chinatown Project Purchase Agreements Pag e 1 1 it is approved . The sales tax revenues will decrease in the short term due to the phasing of th e project, specifically the delayed implementation of the retail properties on the Palm developmen t site. The TOT revenues will not be realized until the completion of the hotel . General Fund Revenue Monterey Parcels Palm Development Sit e Sales Ta x Property Ta x Transient Occupancy Tax $77,90 0 $22,200 $0 $34,20 0 $51,60 0 $316,30 0 Total I $100,1001 $402,100 Parking Fun d If the project had been implemented as originally envisioned in one phase the Parking Fun d would have realized about $2 .8 million . A phased approach has an anticipated benefit of a n additional $1 .7 million because of the continued use of the parking lots on the Pal m Development Site . The following table shows the fiscal benefits for the Parking Fund of th e proposed terms, assuming that the parking on the Palm site remains in operation for seven years . If the Palm site can be developed with a hotel sooner, then all one-time revenues would b e realized at that time . Parking Fund Revenue Monterey Parcels Palm Development Site Parking Revenue s Approximate Parking $78,303 $1,675,32 0 Mitigation Fees (2011 rate)$711,840 $2,046,54 0 Total $790,143 $3,721,860 ALTERNATIVES 1.Reject the proposed Agreements .This alternative should only be selected if the Counci l does not support phasing of the project . If this alternative is selected, the Option will expire o n January 3, 2012 and negotiations for development on the site will need to begin anew . 2.Provide direction to negotiate further and/or provide additional information .During th e discussion of this item, Council may identify additional information needed prior to entering int o the proposed Agreements or may provide direction to negotiate further with Copeland o n specific terms . If Council has concerns about the proposed Agreements, and would like staff t o negotiate further, it will be helpful for Council to clearly state what the concerns are, and ho w Council would like them addressed. ATTACHMENT S 1.Vicinity Map 2.Existing Site Pla n 3.Interim Parking Plan s 4.Proposed Agreements (6, 955 Morro Lease to be issued under separate cover ) 5.Annual Revenue Compariso n T :\Council Agenda Reports\Administration CAR\Chinatown\ChinatownAgreementl2-13-11\CAR12-13-11Agreement .doc x LEGEND Project Site Street Oliv e Downtown Historic Distric t Chinatown Historic District Source:City of San Luis Obispo 1999 . SCALE IN FEET PROJEC T SITE Higuera Pacific Street Islay Street . Dana Street Pismo Street Stree t Project Vicinity,::..Chinatown Project N 0,4o■o — ,,.(coo""44000nao)T Adnho RI, Wood ,,o-o-r-Od , F,sro,ro Er.isoi,Attess/E,n , Ni b SEGMEN T CITY LAND MONT5REY ., SEGMENT.";i 4--CITI LANG 'T No"P., \ • 4 IN..5 p•j,4,■,.No,m . MONTEREY STREET L :=" -(c,"r400■ot414.7 ,cop .44anou.4.) N Existing Site / Demo Plan 1 1 I 5. SHEE T 8 )~H'1`lr ida)W7 Fia (E1G@Ge t)s~aaGT~two ~~gCab le! ,~`r t>:J t (a1 t (9 (E7 ,`!J■l'\/o!ii\slrirmaisaiii■r .pi Issv Parking Summary Stage 4 Remove parking from service at Monterey Stree t parcels of lots 3 and 11 . During construction o n the Monterey Street parcels, a temporar y pedestrian access will be provided by temporally removing space 107 from service adjacent to th e 955 Motto Street building, and allowin g pedestrians to circulate from the parking area m Morro Street via the existing sidewalk along th e 955 Morin building. Stage 5 Monterey Street construction is complete and the parking lots are hilly fimcdoning with all egress to Palm Street The total number of spaces remaining is 115. Parking Statistics Standard: 110 Car spaces Accessible 5 Car space s Total 115 Cu spaces 4 Motorcycle Not a Part III l ~...... Phase 2 - Interim Parking Plan BUll .DI G'C a a 0. =Z.'=•.=~frler4WrYr~t~na,/..r rear r~Y Na*a a—~.rr a M .~.a SHEE T P4 .2 ATTACHMENT 3 SLIEST TITLE:Phase 1-Interim Parking Plan SCALE:1' 20'-0' (24.36 set) 1'-40-0'(11x17 set) CHINATOWN Architect MARK RAWSON, AIA ARCHITECT P.O. Box 12260 San Lab Obispo, CA 93406 (805) 393-0200 Assodatc A,N6xt aµiaM.cu.im+~en i 86.98 CLIENT:SID Chinatown LLC PLOP DATE: November 7, 2011 PURPOSE:Planning Submittal PROJECT NO .: R05117 B5-15 ATTACHMENT 4 Agreement 6 will be provided unde r separate cover ATTACHMENT 4 RELEASE AND WAIVE R This Release and Waiver ("Release Agreement" or "this Agreement") is entere d into as of December _,2011, between by and between THE CITY OF SAN LUI S OBISPO, a municipal corporation and charter city ("City"), and PALM STREE T PARKING STRUCTURE, a California limited liability company ("Developer"), wit h respect to the following facts : RECITALS , A.The parties entered into that certain Payment Agreement, dated as o f November 5, 2003 (the "Payment Agreement") in connection with the construction o f the parking structure at the corner of Palm and Morro Street in San Luis Obispo , California. On June 9, 2006, the Developer submitted a Payment Request to the Cit y under the Payment Agreement and, at the City's request, provided additiona l information to the City on June 26, 2006 . On July 7, 2006, the City notified th e Developer that portions of the amount requested by the Developer would not be pai d based on the information provided . The City paid the balance of the amount requeste d on August 2, 2006 . B.A dispute exists between the parties regarding the amount due to th e Developer under the Payment Agreement . The partied entered into tolling agreements t o extend the statue of limitations with respect to the dispute, which will expire o n December 31, 2011 . C.The parties hereto wish to resolve any and all claims either party ma y have against each other in connection with payments made or payable under th e Payment Agreement . Accordingly, in consideration of the mutual understandings and promises se t forth in this Release Agreement, the parties agree as follows : AGREEMEN T 1 . For good and valuable consideration, the sufficiency of which is hereb y acknowledged, Developer and anyone claiming by, through or under Developer full y and irrevocably releases City, and each of its employees, officers, directors , representatives, agents, servants, attorneys, affiliates, parent companies, subsidiaries , successors and assigns, and all persons, firms, corporations and organizations acting o n its behalf ("Released City Parties"),from any and all claims that it may now have o r hereafter acquire against any of the Released City Parties for any and all costs, losses , liabilities, damages, expenses, demands, claims, actions or causes of action (collectivel y "Claims") arising from or related to the Payment Agreement . This release includes any and all claims of which Developer is presently unaware o r which Developer does not presently suspect to exist which, if known by Developer , would materially affect Developer's release to City . Developer specifically waives th e provision of California Civil Code Section 1542, which provides as follows : B5-16 .1 ATTACHMENT 4 GENERAL RELEASE . A GENERAL RELEASE DOES NO T EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNO W OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME O F EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUS T HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH TH E DEBTOR . 2. For good and valuable consideration, the sufficiency of which is hereb y acknowledged, City and anyone claiming by, through or under City fully an d irrevocably releases Developer, and each of its employees, officers, directors , representatives, agents, servants, attorneys, affiliates, parent companies, subsidiaries , successors and assigns, and all persons, firms, corporations and organizations acting o n its behalf ("Released Developer Parties"),from any and all claims that it may no w have or hereafter acquire against any of the Released Developer Parties for any and al l costs, losses, liabilities, damages, expenses, demands, claims, actions or causes o f action (collectively "Claims")arising from or related to the Payment Agreement . This release includes any and all claims of which City is presently unaware or whic h City does not presently suspect to exist which, if known by City, would materiall y affect City's release to Developer . City specifically waives the provision of Californi a Civil Code Section 1542, which provides as follows : GENERAL RELEASE . A GENERAL RELEASE DOES NO T EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNO W OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME O F EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUS T HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH TH E DEBTOR . 3.Based upon the advice of its counsel, each party hereby expressly , knowingly and voluntarily waives and relinquishes any and all rights that it may hav e under Section 1542 as well as under the provisions of all comparable, equivalent, o r similar statutes and principles of law or equity of any and all states of the United State s or of the United States . Each Party understands and acknowledges the significance an d consequences of this waiver and hereby assumes the risk of any injuries, losses o r damages which may arise from such waiver . Each Party expressly intends that suc h waiver apply to any and all of the claims released by it . 4.This Release Agreement does not constitute an admission by either part y of liability, or an admission that any cause of action exists in favor of either party fo r any claim referred to in this Agreement . 5.All notices, requests, demands and other communications under thi s Release Agreement shall be in writing and shall be deemed to have been duly given o n the date of service if served personally, by reliable overnight courier, or by telecop y transmission for receipt during the receiving parties' normal business hours to the part y to whom notice is to be given, or on the third (3rd) day after mailing if mailed to the 2 B5-16 .2 ATTACHMENT 4 party to whom notice is to be given, by first class mail, registered or certified, return receipt requested, postage prepaid, and properly addressed as follows : City : City of San Luis Obispo 990 Palm Stree t San Luis Obispo, California 93401-324 9 Attention : City Administrative Office r Facsimile : (805) 781-710 9 With a copy to : City Attorne y City of San Luis Obispo 990 Palm Stree t San Luis Obispo, California 93401-324 9 Facsimile : (805) 781-740 9 Developer : Palm Street Parking Structure, LL C Post Office Box 1226 0 San Luis Obispo, California 9340 6 Attention : Tom Copeland Facsimile : (805) 593-010 9 With a copy to : Suzanne Frye r General Counsel Palm Street Parking Structure, LL C Post Office Box 1226 0 San Luis Obispo, California 9340 6 Facsimile : (805) 593-010 9 Any party may change its address for purposes of this Tolling Agreement b y giving the other party written notice of the new address in the manner set forth above . 6. This Agreement shall be governed by and construed in accordance wit h the laws of the State of California . 7.This instrument contains the entire agreement, for purposes of addressin g the Payment Agreement only, between the parties, and no statement, promise, o r inducement made by either party or agents of the parties that is not contained in this written contract shall be valid or binding ; and this contract may not be enlarged , modified, or altered except in writing signed by the parties . 8.Each of the individuals executing this Agreement on behalf of th e undersigned parties represents and warrants that he or she has the right, power and authority to bind the party on whose behalf he or she purports to sign . 9. This Agreement may be executed in counterparts or by facsimile . 3 B5-16 .3 ATTACHMENT 4 IN WITNESS WHEREOF, the parties to this Modification have duly executed i t as of the day and year first written above . CITY OF SAN LUIS OBISPO , a municipal corporation and Charter Cit y By : PALM STREET PARKIN G STRUCTURE, LLC, a California limite d liability compan y By : Approved as to Form : By : J . Christine Dietric k City Attorne y Approved as to Form : By : Suzanne Frye r General Counsel, Palm Street Parking Structure, LL C Its : Its : 4 B5-16 .4 ATTACHMENT 4 AGREEMENT OF PURCHASE AND SAL E Monterey Parcel s This Agreement ("Agreement") is made and entered into as of December , 2011, by an d between SLO CHINATOWN, LLC, a California limited liability company ("Copelands"), and th e CITY OF SAN LUIS OBISPO, a municipal corporation and charter city ("City"). City an d Copelands are each a "Party" hereto, and are sometimes collectively referred to as "Parties". AGREEMENT ARTICLE I - DEFINITION S The following terms shall have the meanings set forth in this Article I when used in thi s Agreement : Section 1 .01 861/863 Palm Building ."861/863 Palm Building" means any and al l structures located on the 861/863 Palm Parcel, commonly referred to as the "Yung building". Section 1 .02 861/863 Palm Parcel ."861/863 Palm Parcel" means that certain real propert y generally described as 861 and 863 Palm Street, San Luis Obispo, California, APN #002-416 - 031, which is currently owned by CP Monterey Morro, LLC, a California limited liabilit y company, which has the same owners as Copelands . Section 1 .03 861/863 Palm Parcel Agreement ."861/863 Palm Parcel Agreement" mean s that certain Agreement of Purchase and Sale — 861/863 Palm Parcels, to be executed and delivered between the City and CP Monterey Morro, LLC . Section 1 .04 Closing ."Closing" means the date upon which and the process by whic h Escrow Company will conclude and consummate the purchase and sale of the Monterey Rea l Property and as more fully described in Article IV below . Section 1 .05 Closing Date ."Closing Date" shall mean the date on which the Closin g occurs . Section 1 .06 Closing Payment ."Closing Payment" means the monetary consideration to b e paid by Copelands to City for the Monterey Real Property as more fully described in Section 2 .0 4 below . Section 1 .07 Escrow ."Escrow" means the escrow to be established at Escrow Company fo r the transfer of the Monterey Real Property as defined below . The Escrow shall be established b y Copelands not later than fifteen (15) business days prior to the Closing Date . Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 1 B5-16 .5 ~y `,A H WENT 4 Section 1 .08 Escrow Company ."Escrow Company" means First American Titl e Insurance Company National Commercial Services, 1850 Mt . Diablo Blvd Suite 300, Walnut Creek, California 94596, or such other escrow company doing business in San Luis Obisp o County, California, as Copelands and City may designate . Section 1 .09 Escrow Instructions ."Escrow Instructions" means the directions to the Escrow Company provided in this Agreement and in such additional instructions prepared b y Escrow Company and approved by the Parties . This Agreement shall constitute joint escro w instructions to Escrow Company . The Parties shall execute such additional instructions no t inconsistent with the provisions of this Agreement which may be reasonably required by Escro w Company . The Parties shall be bound by Escrow Company's general instructions, but if an y conflict between the provisions of this Agreement and the provisions of Escrow Company's general instructions exists or arises, then the provisions of this Agreement shall control . Section 1 .10 Lease for Public Parking ."Lease for Public Parking" means the leas e agreement further described in Section 3 .01(d) over a portion of the Monterey Real Property afte r the Closing Date . Section 1 .11 Monterey Improvements ."Monterey Improvements" means thos e certain improvements to be constructed by Copelands on the Monterey Parcels as entitled by Sa n Luis Obispo City Council Resolution No . 10128 (2009 Series), adopted November 17, 2009, o r as such entitlements subsequently may be modified and approved by the City in the norma l exercise of its development review authority following request therefor by Copelands . Section 1 .12 Monterey Real Property ."Monterey Real Property" means the land and al l appurtenant rights, interests, easements, tenements, estates and improvements owned by the Cit y to be acquired by Copelands hereunder, which consists of the portion of the Real Property whic h is adjacent to Monterey Street, as generally shown on Exhibit A attached hereto, which i s improved with a parking lot . The legal description of the Monterey Real Property shall be prepared and approved by the parties hereto following a survey of the Real Property and th e completion of a lot subdivision process as further described in Section 2 .06 below, and thereupon shall be attached to this Agreement and incorporated as if set forth herein . Section 1 .13 Palm Development Site ."Palm Development Site" means the Palm Rea l Property and the 861/863 Palm Parcels . Section 1 .14 Palm Real Property ."Palm Real Property" means the portion of the Rea l Property which does not include the Monterey Real Property . Section 1 .15 Palm Development Site Agreement ."Palm Development Site Agreement" means that certain Agreement of Purchase and Sale — Palm Development Site, to be executed an d delivered between the City and Copelands . Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 2 B5-16 .6 ATTACHMENT 4 Section 1 .16 Preliminary Title Report."Preliminary Title Report" means the Amende d Preliminary Report prepared by First American Title Insurance Company, dated November 21 , 2011, as Commitment No .: NCS-512999-CC, attached hereto as Exhibit B . Section 1 .17 Purchase Price ."Purchase Price" means the monetary consideration to be pai d by Copelands to City for the Monterey Real Property as more fully described in Section 2 .02 below. Section 1 .18 Real Property."Real Property" means the land and appurtenant rights an d improvements which consists of five (5) parcels located in the block between Palm and Montere y Streets and Morro and Chorro Streets in San Luis Obispo County, California and identified a s two (2) portions of APN #002-416-034, and three (3) portions of APN #002-416-029, as show n on Exhibit C attached hereto . Section 1 .19 Reconfiguration Scope of Work ."Reconfiguration Scope of Work" means th e Copelands' completion of the demolition of the 861/863 Palm Building, creation of new parkin g on the 861/863 Palm Parcel and reconfiguration of the public parking on the Palm Real Propert y in Lots 3 and 11 as shown on Exhibit D to this Agreement pursuant to issued constructio n permits and as discussed in the 861/863 Palm Parcel Agreement . Section 1 .20 Title Company ."Title Company" means First American Title Insuranc e Company National Commercial Services, 1850 Mt . Diablo Blvd Suite 300, Walnut Creek , California 94596, or such other title company doing business in San Luis Obispo County , California, as Copelands and City may designate . ARTICLE II -PURCHASE AND SAL E Section 2 .01 Purchase and Sale .City agrees to sell to Copelands, and Copelands agrees t o purchase from City, the Monterey Real Property upon the terms and conditions set forth in thi s Agreement . Section 2 .02 Purchase Price .The purchase price for the Monterey Real Property is Si x Hundred Seventy-nine Thousand Eight Hundred Dollars ($679,800), plus an amount equal t o Five Hundred Fifty Dollars ($550) for each month or part thereof from (and including) July , 2011, until the month in which the Closing occurs, to be paid all cash through the Escrow at th e Closing . At the Closing of escrow for the Monterey Real Property, Copelands shall be entitled t o a credit against the Purchase Price in the amount of $265,000 (the "Option Payments") fo r payments already made by Copelands to City toward its options to purchase the Monterey Rea l Property . Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 3 B5-16 .7 ATTACHMENT 4 Section 2 .03 Payment for Mitigation of Public Parking Removal .In addition to th e Purchase Price, Copelands shall pay in cash through the Escrow at the Closing the Montere y Parking Mitigation Payment (as defined below) to City . The Monterey Parking Mitigatio n Payment is a fee that shall be the amount paid at the Closing to compensate the City for a portio n of the 155 "Displaced Surface Parking" spaces that will be removed as a result of projec t construction on the Monterey Real Property, as identified in Table 3 .2-4 of the Addendum to the Environmental Impact Report for the Real Property, dated September, 2009 (the "2009 EIR"). The Monterey Parking Mitigation Payment will be equal to the product of the City's then-curren t in-lieu parking fee as of the Closing Date multiplied by the number of Monterey Lost Spaces (a s defined below). $17,796 is the current in-lieu parking fee as adopted by the City, which amount will increase a s of July 1, 2012, and annually thereafter, until the Closing Date occurs due to an inflatio n escalator adopted as part of the City's fee resolutions duly adopted by the City Council . The "Monterey Lost Spaces" shall be the number of parking spaces on the Monterey Real Propert y lost as a result of the planned reconfiguration of the City's existing surface parking lot on the Real Property (the "Monterey Lost Spaces'), estimated to be 41 spaces . By way of example, i f there are 41 Monterey Lost Spaces, and if the Closing were to occur before July 1, 2012, then th e Monterey Parking Mitigation Payment would be the sum of Seven Hundred Twenty-nin e Thousand Six Hundred Thirty-six Dollars ($729,636). (For avoidance of doubt, the Montere y Lost Spaces and the Monterey Parking Mitigation Payment provided for in this Agreement are i n addition to and exclusive of the Palm Lost Spaces and the Palm Parking Mitigation Paymen t provided for in the Palm Development Site Agreement .) Consistent with its obligations as a city to conform to applicable law and exercise its discretio n concerning the approval of any parking reconfiguration plan submitted by Copelands, the Cit y shall cooperate with Copelands in all respects thereto, including evaluating such plan as require d under applicable law, and approving such plan in accordance with applicable law and Cit y policy . Prior to the Closing, the Parties shall attach as Exhibit D an approved parkin g reconfiguration diagram which shall state with precision the number of Monterey Lost Spaces , and such number of parking spaces shall be used to calculate the Monterey Parking Mitigatio n Payment, as described above . Once agreed to by the Parties, the Parties shall execute updated written escrow instructions stating the amount of the Monterey Parking Mitigation Payment . Unmet parking demand caused by the Monterey Improvements does not include any of th e Displaced Surface Parking and therefore, for avoidance of doubt, the parties acknowledge tha t the Monterey Parking Mitigation Payment required hereunder is and shall be separate from, an d in addition to, any parking in-lieu fees required by City or any of its departments charged wit h granting permits required for the Monterey Improvements in connection with any unmet parkin g demand caused by the Project . Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 4 B5-16 .8 ATTA CHMENT 4 Section 2 .04 Payment .The Purchase Price plus the Monterey Parking Mitigation Paymen t (collectively, the "Closing Payment") shall be paid as follows : at least one business day prior t o the Closing, the cash due from Copelands under Sections 2 .02 and 2 .03 of this Agreement shal l be deposited by the Copelands into Escrow by wire transfer or cashier's check . Section 2 .05 Due Diligence ; Condition of Property .Copelands acknowledges that it has performed such due diligence as it elects or has elected to perform as to the condition and al l other aspects of the Monterey Real Property, the title to the Monterey Real Property and th e suitability of the site of the Monterey Real Property for the proposed uses and construction . Copelands further acknowledges that it has or shall have inspected, investigated and tested th e condition of the soil and the geology of the site and the presence of hazardous substances o r archaeological materials and shall have accepted such conditions, and all aspects of the Montere y Real Property in its "AS-IS, WHERE-IS"condition with all faults and defects, whether paten t or latent, known or unknown . Further, in entering into this Agreement and closing the Escro w contemplated hereunder, Copelands expressly represents and warrants to City (i) that Copeland s is relying and shall rely solely on its own due diligence to evaluate all aspects of the Montere y Real Property and its suitability for Copelands' planned development without any representation s and warranties of any kind or nature concerning the Monterey Real Property or any aspec t thereof, either express or implied, from or on behalf of City or any of its employees, agents o r independent contractors, except as otherwise expressly provided in this Agreement, (ii) tha t neither City nor any of its employees, agents or independent contractors has made or i s authorized to make any representation or warranty of any kind or nature concerning the Montere y Real Property, any aspect thereof, or its suitability, either express or implied, nor any warranty , representation or promises of remediation or cure including, without limitation, an y representation or warranty regarding the geological, subsurface, environmental, architectural , engineering or other physical aspects or condition of the Monterey Real Property, includin g without limitation any subsidence or other issues arising from the possible presence of a subterranean creek under or near the Monterey Real Property, the rents, income, expenses , market or other financial aspects or condition of the Monterey Real Property, the complianc e with the Monterey Real Property with any applicable law, code, rule or regulation includin g without limitation any environmental protection, pollution, land use, handicapped access or othe r laws, the zoning of the Monterey Real Property, the accuracy or completeness of any documents , information or other data concerning the Monterey Real Property or any aspect thereof furnishe d or to be furnished to Copelands by or on behalf of City or any of its employees, agents o r independent contractors or in any other manner concerning the Monterey Real Property or an y aspect thereof, (iii) that any and all due diligence materials provided by the City to Copeland s were and are solely for Copelands' specific and limited use in connection with its due diligence and evaluations concerning the Monterey Real Property, (iv) that any due diligence material s prepared by any third party is being furnished to Copelands as an accommodation only withou t any warranty by City or such third party as to the accuracy or completeness thereof, except a s otherwise expressly provided by any separate agreement between Copelands and any such thir d party, and (iii) that City, and any agency of City, shall not have any obligations whatsoever t o Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 5 B5-16 .9 ATTACHMENT 4 perform any tests, prepare any reports, make any repairs or take any other action, includin g governmental actions, or incur any expense with respect to the Monterey Real Property, except a s otherwise expressly provided in this Agreement . Section 2 .06 Release .EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMEN T OR THE LEASE FOR PUBLIC PARKING, COPELANDS AND ANYONE CLAIMING BY , THROUGH OR UNDER COPELANDS FULLY AND IRREVOCABLY RELEASES CITY , AND EACH OF ITS EMPLOYEES, OFFICERS, DIRECTORS, REPRESENTATIVES , AGENTS, SERVANTS, ATTORNEYS, AFFILIATES, PARENT COMPANIES , SUBSIDIARIES, SUCCESSORS AND ASSIGNS, AND ALL PERSONS, FIRMS , CORPORATIONS AND ORGANIZATIONS ACTING ON ITS BEHALF ("RELEASED CITY PARTIES"),FROM ANY AND ALL CLAIMS THAT IT MAY NOW HAVE O R HEREAFTER ACQUIRE AGAINST ANY OF THE RELEASED CITY PARTIES FOR AN Y AND ALL COSTS, LOSSES, LIABILITIES, DAMAGES, EXPENSES, DEMANDS, CLAIMS , ACTIONS OR CAUSES OF ACTION (COLLECTIVELY "CLAIMS")ARISING FROM OR RELATED TO THE CONDITION OF THE MONTEREY REAL PROPERTY INCLUDING , WITHOUT LIMITATION, ANY PATENT OR LATENT CONSTRUCTION DEFECTS O R INADEQUACIES IN THE CONDITION OF THE MONTEREY REAL PROPERTY , INCLUDING COST OF REPAIR OR CORRECTION, ERRORS, OMISSIONS, OR OTHE R CONDITIONS, LATENT OR OTHERWISE, GEOTECHNICAL AND SEISMIC, SURFAC E OR SUBSURFACE, AFFECTING THE MONTEREY REAL PROPERTY OR ANY PORTIO N THEREOF WHETHER OR NOT DISCOVERED PRIOR TO COPELANDS' INSPECTION O F THE MONTEREY REAL PROPERTY, INCLUDING, WITHOUT LIMITATION : (A) ENVIRONMENTAL MATTERS WHICH WERE : (i)DESCRIBED OR REFERRED TO IN THE ENVIRONMENTAL REPORTS OR I N ANY ENVIRONMENTAL AUDIT OBTAINED BY COPELANDS ; O R (ii)DISCOVERABLE BY PRUDENT INVESTIGATION AT ANY TIME PRIOR TO TH E CLOSING ; OR (iii)OTHERWISE DISCLOSED BY CITY TO COPELANDS OR DISCOVERED B Y COPELANDS AT ANY TIME PRIOR TO THE CLOSING ; (B) THE ITEMS DESCRIBED IN SECTION 2 .05 ABOVE ; AN D (C) ANY ERRORS, OMISSIONS OR DEFECTS COMMITTED OR CAUSED BY AN Y AGENT, EMPLOYEE, CONTRACTOR, OR OTHER PERSON PERFORMING WORK O R TAKING ACTION IN CONNECTION WITH THE MONTEREY REAL PROPERTY O N BEHALF OF CITY OR ITS PREDECESSORS ; Monterey PSA OCC revision 120711 10001207 1000 12/7/2011 6 B5-16 .10 ATTACHMENT 4 NOTWITHSTANDING THE FOREGOING, SUCH RELEASE BY COPELANDS O F RELEASED CITY PARTIES SHALL NOT EXTEND TO ANY FRAUD BY CITY UPO N COPELANDS, WHICH IS EXPRESSLY RESERVED BY COPELANDS ON BEHALF O F ITSELF AND ANYONE CLAIMING BY, THROUGH OR UNDER COPELANDS . THIS RELEASE INCLUDES ANY AND ALL CLAIMS OF WHICH COPELANDS I S PRESENTLY UNAWARE OR WHICH COPELANDS DOES NOT PRESENTLY SUSPEC T TO EXIST WHICH, IF KNOWN BY COPELANDS, WOULD MATERIALLY AFFEC T COPELANDS' RELEASE TO CITY . COPELANDS SPECIFICALLY WAIVES TH E PROVISION OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES A S FOLLOWS : "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITO R DOES NOT KNOW OR EXPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME O F EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAV E MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR ." IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE REFLECTS THA T ALL OF THE MONTEREY REAL PROPERTY IS SOLD BY CITY AND PURCHASED B Y COPELANDS SUBJECT TO THE FOREGOING . IT IS NOT CONTEMPLATED THAT TH E PURCHASE PRICE WILL BE INCREASED IF COSTS TO COPELANDS ASSOCIATE D WITH THE MONTEREY REAL PROPERTY PROVE TO BE LESS THAN EXPECTED NO R WILL THE PURCHASE PRICE BE REDUCED IF THE COPELANDS' PLAN TO DEVELO P THE MONTEREY REAL PROPERTY LEADS TO HIGHER COST PROJECTIONS . THI S PROVISION SHALL SURVIVE THE CLOSE OF ESCROW AND RECORDING OF TH E GRANT DEED . Copelands' Initials : City's Initials : Section 2 .07 Subdivision Map .Copelands shall prepare a subdivision map or other appropriate application for the division of the property, for the portion of the Real Property whic h comprises the Monterey Real Property as one lot (the "Subdivision Map"), in substantially th e form attached hereto as Exhibit A . Consistent with its obligations as a city to conform t o applicable law and exercise its discretion concerning applications for subdivisions of rea l property, the City shall cooperate with Copelands in all respects thereto, including evaluatin g such Subdivision Map as required under applicable law, processing such Subdivision Map as a public subdivision or otherwise as allowed by applicable law and executing the same . Provided such Subdivision Map shall have been properly prepared and duly approved, City shall cause th e Subdivision Map to be recorded at the Closing . Monterey PSA OCC revision 120711 10001207 1000 12/7/2011 7 B5-16 .11 ATTACHMENT 4 ARTICLE III - TITLE TO REAL PROPERTY Section 3 .01 Condition of Title of Monterey Real Property .Upon Closing, City shal l deliver the Monterey Real Property to Copelands subject to no leases and occupancies, other tha n the Lease for Public Parking . Title to the Monterey Real Property shall be conveyed by City t o Copelands by a grant deed in form and substance shown on Exhibit F hereto (the "Grant Deed"), and subject to the following "Conditions of Title": (a)A lien to secure payment of real estate taxes and supplemental taxes, i f any, not delinquent ; (b)Matters affecting the condition of title created by or with the writte n consent of Copelands ; (c)Printed exceptions and exclusions as specified on the Preliminary Titl e Report ; and (d)Lease for Public Parking in favor of the City, in the form of Exhibit E attached hereto, executed by Copelands and City and evidencing City's right to use a portion of the Monterey Real Property for public parking until Copelands is ready t o begin construction on the Monterey Real Property . Section 3 .02 Evidence of Title .Delivery of title to the Monterey Real Property i n accordance with Section 3 .01 above shall be evidenced by the willingness of the Title Compan y to provide its written commitment to issue, upon Closing, recordation of the Grant Deed, an d payment of its regularly scheduled premium, an ALTA Standard Coverage Owner's Policy in th e appropriate amount showing title to the Monterey Real Property vested in Copelands, o r Copelands' allowable assignee, subject to the Conditions of Title described in Section 3 .01 . Section 3 .03 Title Vesting.Title shall be vested in the Monterey Real Property in the nam e of Copelands as provided above, or Copelands' allowable assignee . Copelands shall provide written notice to the Parties and Escrow Company of any such allowable assignee not less tha n five (5) business days prior to the Closing . ARTICLE IV - CLOSING Section 4 .01 Closing.The sale and purchase transaction contemplated by this Agreemen t shall be consummated pursuant to the Escrow Instructions not later than August 1, 2012 ( th e "Outside Closing Date") through an escrow established at the Escrow Company . If Copeland s requests an extension of the Outside Closing Date, and provides reasonable evidence showin g that such an extension is needed or advisable to effectuate the purposes of this Agreement, th e Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 8 B5-16 .12 ATTACHMENT 4 City Manager may elect to extend the Outside Closing Date without further additiona l authorization from the City Council, provided that no such extension of the Outside Closing Dat e be later than December 31, 2012 unless the further authorization of the City Council is firs t obtained . Any such extension of the Outside Closing Date shall be documented in a writin g executed and delivered by City Manager, on behalf of City, and by Copelands' authorize d member . Section 4 .02 Conditions to Closing -- City .The City's obligation to transfer or cause th e transfer of the Monterey Real Property to the Copelands shall be subject to the fulfillment of th e conditions precedent (the "City Conditions") set forth below : (a)Related Agreements .Copelands (or its related companies) shall have executed and delivered to City the following agreements : (i) the 861/863 Palm Parce l Agreement ; (ii) Agreement of Purchase and Sale — Palm Development Site ; (c) Lease fo r 955 Morro Street ; (iv) Lease for Public Parking and (v) Release and Waiver . (b)Closing under 861/863 Palm Parcel Agreement .City shall have taken al l actions necessary to close under the 861/863 Palm Parcel Agreement concurrently wit h the Closing under this Agreement . (d)Satisfaction of Copelands' Conditions .Copelands shall have certified i n writing to City that all of Copelands' Conditions have been satisfied and Copelands i s obligated to buy the Monterey Real Property . (e)Performance by Copelands .Copelands shall have performed al l obligations to be performed by Copelands, and shall have made all deliveries required o f Copelands, pursuant to this Agreement prior to Closing . Section 4 .03 Conditions to Closing -- Copelands .The Copelands' obligation to purchas e the Monterey Real Property from the City shall be subject to the fulfillment of the condition s precedent (the "Copelands' Conditions") set forth below : (a)Related Agreements .City shall have executed and delivered to Copeland s (or its related companies) the following agreements : (i) the 861/863 Palm Parce l Agreement ; (ii) Agreement of Purchase and Sale — Palm Development Site ; (c) Lease for 955 Morro Street ; (iv) Lease for Public Parking and (v) Release and Waiver . (b)Closing under 861/863 Palm Parcel Agreement .Copelands shall have taken all actions necessary to close under the 861/863 Palm Parcel Agreemen t concurrently with the Closing under this Agreement . (c)Condition of Property ; Title .The Title Company shall have committed t o insure good title to the Monterey Real Property as described in the Subdivision Map b y Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 9 B5-16 .13 ATTACHMENT 4 issuing a title policy in the form described in Section 4 .03(d) below in the amount equa l to the Purchase Price plus the Monterey Parking Mitigation Payment, subject only to th e Conditions of Title described in Section 3 .01 . (d)Title Conditions .The Closing shall also be conditioned on th e commitment of the Title Company to issue, upon payment of its regularly schedule d premium, its owner's extended ALTA Form 1970(B) coverage policy of title insurance , with the endorsements described below, excluding all bankruptcy exceptions, showin g title to the Monterey Real Property vested of record in the transferee subject (the "Titl e Policy"). The Title Policy shall contain endorsements required by Copelands . (e)Satisfaction of City Conditions .City shall have certified that all of th e City Conditions have been satisfied and City is obligated to sell the Monterey Rea l Property. (f)Performance by City .City shall have performed all obligations to b e performed by City, and shall have made all deliveries required of City, pursuant to thi s Agreement prior to Closing . Section 4 .04 Time for Closing .The Closing shall take place fifteen (15) days after th e conditions set forth in Sections 4 .02 and 4 .03 above have been satisfied . The date of the Closing may be extended by agreement of the parties . On the Closing Date, sole and exclusiv e possession of the Monterey Real Property shall be delivered to Copelands, or its allowabl e assignee, by City . Section 4 .05 Deposits by City .No later than one business day before the Closing Date , City shall deposit with Escrow Company : a)The Grant Deed in the form attached hereto as Exhibit F duly executed by City , acknowledged and in recordable form , b)If required by Escrow Company, City's FIRPTA Affidavit in a form reasonabl y acceptable to City, duly executed by City . c)If required by Escrow Company, a California Form 593-C Real Estate Withholdin g Exemption Certificate on Form 593-C, or equivalent, duly executed by City ("Form 593 - C"). d)The Subdivision Map, or other evidence of valid subdivision by means other than a Subdivision Map (such as by lot line adjustment), in the form approved by the Parties . e)Such other bills of sale, assignments and other instruments of transfer or conveyance a s Copelands may reasonably request or as may be otherwise necessary to evidence and Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 10 B5-16 .14 AT TACHMENT 4 effect the sale, assignment, transfer, conveyance and delivery of the Monterey Rea l Property to Copelands . Section 4 .06 Deposits by Copelands .No later than one business day before the Closin g Date, Copelands shall deposit with Escrow Company : a)The monies required pursuant to Sections 2 .02 and 2 .03 . b)Counterpart originals of the document listed in Sections 4 .05(a) above . c)Such other instruments or documents as may be necessary to effect the sale , assignment, transfer, conveyance and delivery of the Monterey Real Property t o Copelands . Section 4 .07 Escrow Company's Actions . Upon the Closing Date, when Escro w Company holds the items required to be deposited by City and Copelands as described above , Escrow Company is prepared to issue and deliver to Copelands the Title Policy, and Escro w Company has received written authorization to close the escrow from Copelands and City , Escrow Company is hereby instructed and authorized to : a)Record the Subdivision Map or other document evidencing the valid subdivisio n of the Monterey Real Property from the Palm Real Property . b)Record the Grant Deed in the Office of County Recorder of the County . c)Pay any transfer taxes . d)Instruct the County Recorder to return the Grant Deed to Copelands . e)Disburse to City from the funds deposited into Escrow by Copelands the Purchas e Price less City's share of prorations and other closing costs hereunder. Disburse from funds deposited by Copelands amounts toward payment of all othe r items chargeable to the account of Copelands hereunder, and disburse the balanc e of such funds, if any, to Copelands . Deliver to Copelands the Non-foreign Affidavit, if any, the Form 593-C, if any , and the Title Policy . ARTICLE V - ADJUSTMENT AND PRORATION S At Closing, the following items shall be adjusted and prorated between Copelands an d City by Escrow Company : Monterey PSA OCC revision 120711 10001207 1000 12/7/2011 f) g ) 11 B5-16 .15 ATTACHMENT 4 Section 5 .01 Taxes .Taxes and assessments on the Monterey Real Property for the perio d prior to the Closing shall not be prorated, as the Monterey Real Property shall have been exemp t from property taxes prior to the Closing as a result of its ownership by City ; however, as of the Closing, the Monterey Real Property shall be subject to real property taxes and assessments, al l of which shall be paid by Copelands outside of Escrow . Section 5 .02 Utilities and Contracts .All costs, if any, of utilities furnished to the Montere y Real Property shall be prorated as of the Closing Date . ARTICLE VI - CLOSING COSTS ; NO BROKER S Section 6 .01 Copelands to Pay All Closing Costs .At Closing, Copelands shal l pay all of the following costs of the Closing, through Escrow: All fees and costs for releasing al l encumbrances, liens and security interests of record which are not allowable Conditions to Title , all applicable sales, use, documentary or other transfer taxes arising out of the sale of th e Monterey Real Property by City to Copelands, all outside counsel fees for the transaction s contemplated hereunder and not paid prior to Closing pursuant to Section 11 .06, the premium fo r the Title Policy for the Monterey Real Property and any endorsements requested by Copeland s and all fees to the Escrow Company . Section 6 .02 No Brokerage Commissions .Each of City and Copelands represent s and warrants to the other that it has not dealt with or been represented by any brokers or finder s in connection with the purchase and sale of the Monterey Real Property . Each Party shall indemnify and hold the other free and harmless from and against all costs and liabilitie s including, without limitation, attorneys' fees and the costs and expenses of litigation, for cause s of action or proceedings which may be instituted by any other broker, agent or finder, licensed o r otherwise, claiming through, under or by reason of the conduct of the indemnifying Party i n connection with this transaction. Section 6 .03 Other Closing Costs .Any and all other closing costs related to the transactio n shall be paid by the Parties in the manner consistent with customary practice in San Luis Obisp o County . Section 6 .04 Post-Closing Prorations .Should any real estate taxes, bonds, assessments , utilities, other expenses of the Monterey Real Property or liens relating to periods before th e Closing Date be omitted from such prorations for any reason, including without limitation lat e assessment or Title Company error, then after the Closing, City shall remain solely responsibl e for, and shall promptly pay before delinquency, any such real estate taxes, bonds, assessments , utilities, other expenses of the Monterey Real Property or liens relating to periods before th e Closing Date . This obligation shall survive the Closing . Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 12 B5-16 .16 ATTACHMENT 4 ARTICLE VII - POST CLOSING OBLIGATION S Section 7 .01 Monterey Frontage Retrofit .Within thirty (30) days after the date on whic h this Agreement shall have been executed by City, Copelands shall commence the seismic retrofi t on the buildings it currently owns on Monterey Street, San Luis Obispo, California, located a t 840 Monterey Street, 848 Monterey Street, 868 Monterey and 870 Monterey . Not later than Jul y 1, 2015, Copelands shall complete such seismic retrofit . Section 7 .02 Reconfigure Parking .Promptly after the Closing Date, Copelands shall begi n to, and shall thereafter diligently continue until completion, to demolish the 861/863 Pal m Building (preserving the Shanghai Low Restaurant sign for use as contemplated in the 200 9 EIR), create new parking on the 861/863 Palm Parcel and reconfigure the public parking on th e Palm Real Property in Lots 3 and 11 as shown on Exhibit D . All costs associated with th e demolition of the 861/863 Palm Building and construction of the reconfigured parking lot , including supplying and installing the parking meter poles, will be paid by Copelands, excep t City will supply and install the parking meter heads at its cost . Prior to the demolition of th e 861/863 Building, Copelands shall also be responsible for the removal of such asbesto s containing building materials as are disclosed in that certain letter, dated November 11, 2011 , from West Coast Safety Consultants, to Copelands Properties, with respect to its inspection fo r asbestos containing building materials at two commercial structures located at 761 and 763 Pal m Street [sic], San Luis Obispo, California, such removal and disposition of such materials to b e completed in compliance with applicable law, at Copelands' sole expense . As provided in th e Lease for Public Parking, public parking on the Palm Real Property shall continue to exit ove r the Monterey Real Property after the Closing until the Lease for Public Parking is terminated a s provided therein . Section 7 .03 Redevelopment of Monterey Real Property .Promptly after the Closing Dat e and recordation of the Subdivision Map, but not later than four (4) calendar years after th e Closing Date (the "Monterey Construction Deadline"), Copelands shall redevelop the Montere y Real Property by substantially completing the Monterey Improvements . Section 7 .04 Survival of Obligations Post-Closing .Without limitation, the obligations o f Copelands set forth in this Article VII shall survive the Closing of the Escrow and th e recordation of the Grant Deed . ARTICLE VIII - INDEMNIFICATION S Section 8 .01 Indemnification by City .As of the Closing Date, City shall indemnify, defen d and hold Copelands harmless of, against and from any and all liabilities, claims, demands an d expenses, of any kind or nature (except those items which by this Agreement specifically becom e the obligation of Copelands) accruing on or before the Closing Date, including any claim fo r labor, materials or supplies in connection with work performed by the City on the Monterey Rea l Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 13 B5-16 .17 ATTACHMENT 4 Property, and which are in any way related to the ownership or operation of the Monterey Rea l Property by the City . Section 8 .02 Indemnification by Copelands .As of the Closing Date, Copelands shal l indemnify, defend and hold City harmless of, against and from any and all liabilities, claims , demands and expenses of any kind or nature (except those items which by this Agreemen t specifically remain the obligation of City) accruing after the Closing Date, including any clai m for labor, materials or supplies in connection with work performed on the Monterey Rea l Property (except as provided in the Lease for Public Parking), and all expenses related theret o including, without limitation, court costs and attorneys' fees . Without limitation, from and afte r the date of execution of this Agreement, Copelands shall also indemnify and defend City, usin g counsel approved by City in its absolute discretion, from any and all third party challenges to thi s Agreement or any of the transactions contemplated hereunder or any challenge to an y environmental impact report ("EIR"), including any addendum or supplement, proposed, drafte d or certified in connection with any of the foregoing transactions . ARTICLE IX - REMEDIE S Section 9 .01 Right to Cure .Should either Party default under any of its obligations hereunder other than its obligation to close by the Outside Closing Date, the other Party shal l provide notice of such default to the defaulting Party, who will be allowed to cure any suc h default for a period of five (5) business days after notice is given the defaulting Party or if th e nature of the breach is that it cannot reasonably be cured within such five (5) day period, then th e defaulting Party will be allowed to commence to correct such breach within such five (5) da y period and diligently proceed therewith to completion . No grace or cure period is allowed for th e failure of either Party to cause the Closing to occur prior to or on the Outside Closing Date . Section 9 .02 Termination and Other Remedies .Should the Closing not occur on or befor e the Outside Closing Date for any reason other than the default of City under this Agreement, the n this Agreement shall be terminated, and City shall be entitled to keep all of the Option Payments , and Copelands acknowledges and agrees it shall have no rights either to the Option Payments o r the Monterey Real Property, including without limitation any right to bring any action seekin g specific performance of this Agreement, damages for its breach, or refund of the Option Payments . Should the Closing fail to occur on or before the Outside Closing Date due to defaul t of City which is not cured within any applicable cure period, then Copelands may elect t o terminate this Agreement by written notice thereof to the City, and City shall pay to Copeland s the Option Payments within thirty (30) days of such termination . Should either Party default under its obligations pursuant to this Agreement, and should suc h default result in the Closing failing to occur, then the non-defaulting Party shall have the right t o bring an action against the defaulting Party seeking specific performance of this Agreement . Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 14 B5-16 .18 ATTACHMENT 4 Copelands and City agree that in the event the Closing fails to occur because of Copelands ' default, breach or failure to perform hereunder and not due to City's wrongful acts, omissions o r breach, the damages to City would be extremely difficult and impracticable to ascertain, and tha t therefore, the sum of the Option Payments and all interest earned thereon is a reasonable estimat e of the damages to City . Accordingly, Copelands agrees that upon (1) Copelands' receipt o f notice of such default or breach from City, (2) failure by Copelands to cure said breach, defaul t or failure to perform within five (5) days after receipt of such notice, and (3) failure to clos e escrow occurs because of such breach, default or failure to perform, then City shall retain th e Option Payments (and all interest earned thereon) previously delivered to City as liquidate d damages, as City's sole remedy in the event of any such material breach or default by Copeland s hereunder. Initials of Copelands : Initials of City : Section 9 .03 Post-Closing Remedies .In the event that Copelands defaults in performin g any obligations under Section 7 .02 of this Agreement, and fails to cure any such default withi n the cure period provided pursuant to Section 9 .01, then City shall have the right to seek specifi c performance as well as any other rights or remedies to which City may be entitled unde r applicable law and City shall have also the right to terminate the Palm Development Sit e Agreement, to keep any and all deposits and option payments previously made by Copelands i n connection therewith and to retain title to the 861/863 Palm Parcel . In lieu of any other remedie s to which it might otherwise be entitled under applicable law, including without limitation th e right to seek monetary damages, specific performance or rescission of this Agreement, shoul d Copelands fail to perform any of its post-closing obligations stated in Article VII (other tha n under Section 7 .02) timely, and fails to cure any such default within the cure period provide d pursuant to Section 9 .01, such failure shall constitute a default by Copelands hereunder, and City , as its sole and only remedy therefor, shall have the right to terminate the Palm Development Sit e Agreement and to keep any and all deposits and option payments previously made by Copeland s in connection therewith and to retain title to the 861/863 Palm Parcel . ARTICLE X - REPRESENTATIONS AND WARRANTIE S Section 10 .01 Representations and Warranties of Copelands .Copelands makes the following representations and warranties to City : a)Copelands is a California limited liability company duly organized and validl y existing under the laws of the State of California, and is qualified to do busines s in the State of California . b)Copelands has the right, power and authority to enter into this Agreement and t o perform its obligations hereunder, and the person(s) executing this Agreement o n behalf of Copelands have the right, power and authority to do so . Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 15 B5-16 .19 ATTACHMENT 4 c)This Agreement constitutes the legal, valid and binding obligation of Copeland s enforceable against Copelands in accordance with its terms, except to the exten t that such enforcement may be limited by applicable bankruptcy, insolvency , moratorium and other principles relating to or limiting the rights of contractin g parties generally . Neither this Agreement nor the consummation of any of th e transactions contemplated hereby violates or shall violate any provision of an y agreement or document to which Copelands is a party or to which Copelands i s bound . No consent from any third party is required before the Monterey Rea l Property may be purchased by Copelands . d)Copelands is not bankrupt or insolvent under any applicable Federal or stat e standard . Copelands has not filed for protection or relief under any applicabl e bankruptcy or creditor protection statute . Copelands has not been threatened b y creditors with an involuntary application of any applicable bankruptcy or credito r protection statute . Copelands is not entering into the transactions described in thi s Agreement with an intent to defraud any creditor or to prefer the rights of on e creditor over any other . City and Copelands have negotiated this Agreement a t arms-length and the consideration to be paid represents fair value for the assets t o be transferred . All representations and warranties of Copelands in this Agreement are made as of the date of thi s Agreement and as of the Closing, and shall survive the Closing and the recordation of the Gran t Deed . It shall be a material default if Copelands is unable to make such representations and warranties truthfully as of the Closing Date . Section 10 .02 Representations and Warranties of City .City makes the following representations and warranties to Copelands : a) City has not encumbered, transferred, optioned, assigned or otherwise conveye d its interest or any portion of its interest in the Monterey Real Property or an y portion thereof except as stated in the Preliminary Report, nor has City entere d into any agreement (other than this Agreement or the agreements described i n Section 11 .09) to do so . Without limitation of the foregoing, City has provided n o right or option to purchase the Monterey Real Property, or any part thereof, to an y third person including any tenant of any portion of the Monterey Real Property . d) To City's actual knowledge, the Monterey Real Property is not in violation, no r has been or is currently under investigation for violation of any federal, state o r local law, ordinance or regulation relating to industrial hygiene, worker health an d safety, or to the environmental conditions in, at, on, under or about the Montere y Real Property including, but not limited to, soil and groundwater conditions ; the Monterey Real Property has not been subject to a deposit of any Hazardou s Substance . To City's actual knowledge, neither City nor any third party has used , Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 16 B5-16 .20 ATTACHMENT 4 generated, manufactured, stored or disposed in, at, on, under or about th e Monterey Real Property or transported to or from the Monterey Real Property an y Hazardous Substance other than in compliance with all applicable Laws . To City's actual knowledge, there has been no discharge, migration or release of an y Hazardous Substance from, into, on, under or about the Monterey Real Property . To City's actual knowledge, there is not now, nor has there ever been on or in the Monterey Real Property underground storage tanks or surface impoundments, an y asbestos-containing materials or any polychlorinated biphenyls used in hydrauli c oils, electrical transformers or other equipment . City assigns to Copeland , effective upon the Closing, all claims, counterclaims, defenses or actions, whethe r at common law, or pursuant to any other applicable federal or state or other law s which City may have against any third parties relating to the existence of an y Hazardous Substance in, at, on, under or about the Monterey Real Property . e) To City's actual knowledge, City is not in default under, nor has City received an y notice that any event has occurred which with the giving of notice or the passag e of time, or both, would constitute a default under, any contract, transaction , agreement, covenant, condition, restriction, lease, easement, encumbrance o r instrument pertaining to the Monterey Real Property . fl To City's actual knowledge, there are no lawsuits, claims, suits, proceedings o r investigations pending nor, to City's actual knowledge, threatened against o r affecting City or any of the Monterey Real Property nor, to City's actua l knowledge, is there any basis for any of the same . There are no lawsuits, suits or proceedings pending in which City is the plaintiff or claimant and which relate t o the Monterey Real Property . As used herein, "to City's actual knowledge" means to the actual knowledge as of the date firs t written above of Jay Walter, the Public Works Director for the City, and J . Christine Dietrick , City Attorney for the City, but without any duty to investigate, make inquiries or undertake an y due diligence whatsoever . All representations and warranties of City in this Agreement are mad e as of the date of this Agreement and as of the Closing, and shall survive the Closing and th e recordation of the Grant Deed for a period of one year . It shall be a material default if City i s unable to make such representations and warranties truthfully as of the Closing Date . ARTICLE XI - MISCELLANEOU S Section 11 .01 Notices .All notices, demands or other communications of any typ e (collectively "Notices") given by City to Copelands or by Copelands to City, whether required b y this Agreement or in any way related to this transaction, shall be sufficient if in writing an d delivered by hand or Federal Express or similar courier service to the person to whom the Notic e is directed or mailed by United States Mail, as a Registered or Certified item, Return Receip t Monterey PSA OCC revision 120711 10001207 1000 12/7/2011 17 B5-16 .21 A TTACHMENT 4 Requested, at or to the addresses specified in this section . Notices delivered by mail shall b e deposited in a Post Office or other depository under the care or custody of the United State s Postal Service, enclosed in a wrapper with proper postage affixed, addressed as follows : City : City of San Luis Obisp o 990 Palm Street San Luis Obispo, California 9340 1 Attention : City Manage r With copies to : City Attorne y 990 Palm Street San Luis Obispo, California 9340 1 Copelands : Thomas M . Copeland, Manager SLO Chinatown, LL C Post Office Box 1226 0 San Luis Obispo, California 9340 6 With Copies to : Suzanne Fryer Copelands' Propertie s 1026 Chorro Street, Suite 20 0 Post Office Box 12260 San Luis Obispo, California 9340 6 Section 11 .02 Governing Law ; Plurality ; and Gender .This Agreement shall be construe d and interpreted in accordance with the laws of the State of California . Where required for prope r interpretation, words in the singular shall include the plural ; the masculine gender shall include the neuter and the feminine, and vice versa . Section 11 .03 Amendment .This Agreement may not be modified or amended, except by a n agreement in writing signed by the parties to this Agreement . The parties may waive any of th e conditions contained in this Agreement or any of the obligations of the other party under thi s Agreement, but any such waiver shall be effective only if in writing and signed by the part y waiving such conditions or obligations . Section 11 .04 Authorization .The person executing this Agreement on behalf of Copeland s hereby warrants and represents to City that all necessary legal prerequisites to that party's execution of this Agreement have been satisfied and that he or she is fully authorized to do s o and to bind the party of whose behalf he or she signs . The person executing this Agreement o n behalf of City claims to do so to the extent the authority to do so has been duly delegated to tha t person by the City Council of the City in accordance with applicable law . Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 18 B5-16 .22 ATTACHMENT 4 Section 11 .05 Time of Essence .Time is of the essence in this Agreement . Section 11 .06 Attorneys' Fees for Transaction and for Disputes .Copelands shall pay all o f the City's outside counsel's fees and costs incurred in connection with the documentation an d negotiation of this Agreement as of the date of the execution of this Agreement upon the City's execution and delivery of this Agreement to Copelands, and all of City's other outside counse l fees at Closing. If it becomes necessary for either party to file a suit to enforce this Agreement o r any provisions contained in this Agreement, or to seek damages for a breach, the prevailing part y shall be entitled to recover, in addition to all other remedies or damages, reasonable attorneys ' fees incurred in such suit . Section 11 .07 Consent to Jurisdiction .City and Copelands agree that any suit, action o r other legal proceeding arising out of or in connection with this Agreement may be brought, an d shall be brought only, in a superior or municipal court of the County of San Luis Obispo, State o f California and hereby consent to the jurisdiction of any such court in any such suit, action o r proceedings . City and Copelands hereby waive any objection which such party may have to th e laying of any such suit, action or proceeding in any such court . Section 11 .08 Captions .The description headings of the several Articles, Sections an d Paragraphs contained in this Agreement are inserted for convenience only and shall not control o r affect the meaning or construction of any of the provisions of this Agreement . Section 11 .09 Entire Agreement .Except for the agreements also described in thi s Agreement, this Agreement, including the Exhibits attached to this Agreement, constitutes th e entire agreement among the parties pertaining to the subject matter of this Agreement an d supersedes all prior and contemporaneous agreements and understandings of the parties i n connection therewith, including but not limited to that certain Option to Purchase Real Property , dated as of November 5, 2003, Modification to Option to Purchase Real Property, dated as o f April 3, 2008, Second Modification to Option to Purchase Real Property, dated as of July 1, 200 8 and Third Modification to Option to Purchase Real Property, dated as of July 1, 2011 . N o representation, warranty, covenant, agreement or condition not expressed in this Agreement shal l be binding upon the parties to this Agreement or shall affect or be effective to interpret, chang e or restrict the provisions of this Agreement . Section 11 .10 Counterparts .A counterpart of this Agreement with separate but full y executed signature pages attached thereto shall have the full force and effect of an origina l executed instrument . Section 11 .11 Successors and Assigns .Other than an assignment to a qualified intermediary to facilitate a Section 1031 exchange, or an assignment of Copelands' rights but not it s obligations under this Agreement to an affiliate for purposes of vesting the title to the Montere y Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 19 B5-16 .23 ATTACHMENT 4 Real Property in such affiliate, this Agreement shall not be assignable by either party, an d nothing contained herein shall inure to the benefit of other parties . Section 11 .12 Exchange .The City acknowledges that Copelands may wish to effect a ta x deferred exchange as provided by Internal Revenue Code Section 1031, as amended and th e treasury regulations promulgated there under . Copelands' rights under this Agreement may b e assigned to a Qualified Intermediary for the purpose of completing such an exchange, so long a s such assignment does not impose on the City any obligations greater than the terms an d conditions of this Agreement, including any obligation to pay any additional costs, and does no t result in any delay in the Closing Date or the performance of Copelands' obligations hereunder. The parties agree to cooperate in all reasonable respects with each other and any Qualifie d Intermediary of the other party in a manner necessary to complete such an exchange . Nothing herein shall require any party to take title to any real property as part of its obligation t o cooperate in any such trade or exchange . Section 11 .13 Tax Reporting .Escrow Company is designated the "real estate reportin g person" for purposes of Section 6045 of the Internal Revenue Code of 1986, as amended, an d Treasury Regulations Section 1 .6045 4, and any instructions or settlement statement prepared by Escrow Company shall so provide . Escrow Company shall be responsible for filing Form 1099 S with the Internal Revenue Service . Section 11 .14 Force Majeure .Neither Party shall be liable for any failure or delay in it s performance under this Agreement (other than for delay in the payment of money due an d payable hereunder) if and to the extent said failures or delays are caused by causes beyond tha t Party's control that occur without its fault or negligence, including without limitation, fire , explosion, flood, severe weather, accident, strike, governmental act, embargo, shortages of labor , materials or fuel, failure by, or inability of , contractors or other third parties to perform , computer system failure, war or military action, riot, or civil disturbance ; provided that, as a condition to its claim of nonliability, the Party experiencing the difficulty shall give the othe r Party written notice of any such failure or delay promptly and in any event not later than five (5 ) business days after such failure or delay begins, and such notice shall describe in detail the reaso n for such failure or delay . Further, such Party experiencing the difficulty shall use al l commercially reasonable efforts to correct the failure or delay as quickly as possible under th e circumstances . Dates by which performance obligations are scheduled to be met will b e extended for a period of time equal to the time lost due to any delay so caused . ARTICLE XII - EXHIBIT S All Exhibits shall be approved by each party, which approval shall be evidenced by suc h party's initials on each Exhibit hereto . Exhibit A Monterey Real Property Ma p Monterey PSA OCC revision 120711 10001207 1000 12/7/2011 20 B5-16 .24 ATTACHMENT 4 Exhibit B Preliminary Title Report Exhibit C Real Property Map Exhibit D Parking Lot Plan Exhibit E Lease for Public Parkin g Exhibit F Grant Dee d This Agreement is executed by the parties as of the date first written above . SLO CHINATOWN, LLC , a California limited liability compan y By : Thomas M . Copeland Its : Manage r Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 21 B5-16 .25 ATTACHMENT 4 CITY OF SAN LUIS OBISPO , a municipal corporation and Charter City By :, Mayor Attest : By : City Clerk Approved as to Form: By : City Attorne y Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 22 B5-16 .26 ATTACHMENT 4 TABLE OF CONTENTS ARTICLE I - DEFINITIONS 1 Section 1 .01 861/863 Palm Building 1 Section 1 .02 861/863 Palm Parcel 1 Section 1 .03 861/863 Palm Parcel Agreement 1 Section 1 .04 Closing 1 Section 1 .05 Closing Date 1 Section 1 .06 Closing Payment 1 Section 1 .07 Escrow 1 Section 1 .08 Escrow Company 2 Section 1 .09 Escrow Instructions 2 Section 1 .10 Lease for Public Parking 2 Section 1 .11 Monterey Improvements 2 Section 1 .12 Monterey Real Property 2 Section 1 .13 Palm Development Site 2 Section 1 .14 Palm Real Property 2 Section 1 .15 Palm Development Site Agreement 2 Section 1 .16 Preliminary Title Report 3 Section 1 .17 Purchase Price 3 Section 1 .18 Real Property 3 Section 1 .19 Reconfiguration Scope of Work 3 Section 1 .20 Title Company 3 ARTICLE II - PURCHASE AND SALE 3 Section 2 .01 Purchase and Sale 3 Section 2 .02 Purchase Price 3 Section 2 .03 Payment for Mitigation of Public Parking Removal 4 Section 2 .04 Payment 5 Section 2 .05 Due Diligence ; Condition of Property 5 Section 2 .06 Release 6 Section 2 .07 Subdivision Map 7 ARTICLE III - TITLE TO REAL PROPERTY 8 Section 3 .01 Condition of Title of Monterey Real Property 8 Section 3 .02 Evidence of Title 8 Section 3 .03 Title Vesting 8 ARTICLE IV - CLOSING 8 Section 4 .01 Closing 8 Section 4 .02 Conditions to Closing -- City 9 Section 4 .03 Conditions to Closing -- Copelands 9 Section 4 .04 Time for Closing 1 0 Section 4 .05 Deposits by City 1 0 Section 4 .06 Deposits by Copelands 1 1 Section 4 .07 Escrow Company's Actions 1 1 ARTICLE V - ADJUSTMENT AND PRORATIONS 1 1 Section 5 .01 Taxes 1 2 Section 5 .02 Utilities and Contracts 1 2 Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 23 B5-16 .27 ATTACHMENT 4 ARTICLE VI - CLOSING COSTS ; NO BROKERS 1 2 Section 6 .01 Copelands to Pay All Closing Costs 1 2 Section 6 .02 No Brokerage Commissions 1 2 Section 6 .03 Other Closing Costs 1 2 Section 6 .04 Post-Closing Prorations 1 2 ARTICLE VII - POST CLOSING OBLIGATIONS 1 3 Section 7 .01 Monterey Frontage Retrofit 1 3 Section 7 .02 Reconfigure Parking 1 3 Section 7 .03 Redevelopment of Monterey Real Property 1 3 Section 7 .04 Survival of Obligations Post-Closing 1 3 ARTICLE VIII - INDEMNIFICATIONS 1 3 Section 8 .01 Indemnification by City 1 3 Section 8 .02 Indemnification by Copelands 1 4 ARTICLE DC - REMEDIES 1 4 Section 9 .01 Right to Cure 1 4 Section 9 .02 Termination and Other Remedies 1 4 Section 9 .03 Post-Closing Remedies 1 5 ARTICLE X - REPRESENTATIONS AND WARRANTIES 1 5 Section 10 .01 Representations and Warranties of Copelands 1 5 Section 10 .02 Representations and Warranties of City 1 6 ARTICLE XI - MISCELLANEOUS 1 7 Section 11 .01 Notices 1 7 Section 11 .02 Governing Law; Plurality; and Gender 1 8 Section 11 .03 Amendment 1 8 Section 11 .04 Authorization 1 8 Section 11 .05 Time of Essence 1 9 Section 11 .06 Attorneys' Fees for Transaction and for Disputes 1 9 Section 11 .07 Consent to Jurisdiction 1 9 Section 11 .08 Captions 1 9 Section 11 .09 Entire Agreement 1 9 Section 11 .10 Counterparts 1 9 Section 11 .11 Successors and Assigns 1 9 Section 11 .12 Exchange ..: 20 Section 11 .13 Tax Reporting 20 Section 11 .14 Force Majeure 2 0 ARTICLE XII - EXHIBITS 2 0 Monterey PSA OCC revision 120711 10001207 100 0 12/7/2011 24 B5-16 .28 ATTACHMENT 4 AGREEMENT OF PURCHASE AND SAL E 861/863 Palm Parce l This Agreement ("Agreement") is made and entered into as of December , 2011, by and between CP MONTEREY MORRO, LLC, a California limited liability company ("Copelands"), an d the CITY OF SAN LUIS OBISPO, a municipal corporation and charter city ("City"). City and Copelands are each a "Party" hereto, and are sometimes collectively referred to as "Parties". AGREEMEN T ARTICLE I - DEFINITIONS The following terms shall have the meanings set forth in this Article I when used in thi s Agreement : Section 1 .01 861/863 Palm Building ."861/863 Palm Building" means any and al l structures located on the 861/863 Palm Parcel, commonly referred to as the "Yung building". Section 1 .02 861/863 Palm Parcel ."861/863 Palm Parcel" means that certain real property generally described as 861 and 863 Palm Street, San Luis Obispo, California, APN #002-416 - 031 which is currently owned by Copelands, including without limitation the land and al l appurtenant rights, interests, easements, tenements, estates, buildings and improvements thereon , and which is legally described as stated in Exhibit A hereto . Section 1 .03 Closing ."Closing" means the date upon which and the process by whic h Escrow Company will conclude and consummate the purchase and sale of the 861/863 Pal m Parcel and as more fully described in Article IV below . Section 1 .04 Closing Date ."Closing Date" shall mean the date on which the Closin g occurs . Section 1 .05 Closing Payment . "Closing Payment" means the monetary consideration to b e paid by City to Copelands for the 861/863 Palm Parcel as more fully described in Section 2 .0 2 below . Section 1 .06 Escrow . "Escrow" means the escrow to be established at Escrow Compan y for the transfer of the 861/863 Palm Parcel as defined below . The Escrow shall be established b y Copelands not later than fifteen (15) business days prior to the Closing Date . Section 1 .07 Escrow Company ."Escrow Company" means First American Title Insuranc e Company, National Commercial Services, 1850 Mt . Diablo Blvd Suite 300, Walnut Creek , California 94596, or such other escrow company doing business in San Luis Obispo County , California, as City and Copelands may designate . 861/863 Palm PSA 120611 100 0 12/7/2011 1 B5-16 .29 ATTACHMENT 4 Section 1 .08 Escrow Instructions ."Escrow Instructions" means the directions to the Escrow Company provided herein and in such additional instructions prepared by Escro w Company and approved by the Parties . This Agreement shall constitute joint escrow instruction s to Escrow Company . The Parties shall execute such additional instructions not inconsistent wit h the provisions of this Agreement which may be reasonably required by Escrow Company . The Parties shall be bound by Escrow Company's general instructions, but if any conflict between th e provisions of this Agreement and the provisions of Escrow Company's general instructions exist s or arises, then the provisions of this Agreement shall control . Section 1 .09 Monterey Parcels Agreement ."Monterey Parcels Agreement" means tha t certain Agreement of Purchase and Sale — Monterey Parcels, to be executed and delivered between the City and SLO Chinatown, LLC . Section 1 .10 Monterey Real Property ."Monterey Real Property" means the land and al l appurtenant rights, interests, easements, tenements, estates and improvements which consist o f the portion of the Real Property which is adjacent to Monterey Street as more fully described i n the Monterey Parcels Agreement . Section 1 .11 Palm Development Site ."Palm Development Site" means the Palm Real Property and the 861/863 Palm Parcel . Section 1 .12 Palm Real Property ."Palm Real Property" means the portion of the Rea l Property which does not include the Monterey Real Property . Section 1 .13 Palm Development Site Agreement ."Palm Development Site Agreement " means that certain Agreement of Purchase and Sale — Palm Development Site, to be executed an d delivered between the City and SLO Chinatown, LLC . Section 1 .14 Preliminary Title Report ."Preliminary Title Report" means the Preliminar y Report prepared by First American Title Insurance Company, dated November 4, 2011, a s Commitment No .: NCS-512995-CC, attached hereto as Exhibit B . Section 1 .15 Purchase Price ."Purchase Price" means the monetary consideration to b e paid by City to Copelands for the 861/863 Palm Parcel as more fully described in Section 2 .0 2 below. Section 1 .16 Real Property ."Real Property" means the land and appurtenant rights an d improvements which consists of five (5) parcels located in the block between Palm and Montere y Streets and Mono and Chorro Streets in San Luis Obispo County, California and identified a s two (2) portions of APN #002-416-034, and three (3) portions of APN #002-416-029, a s described in the Monterey Parcels Agreement . The Real Property and the 861/863 Palm Parcel are shown on Exhibit C attached hereto . 861/863 Palm PSA 120611 1000 12/7/2011 2 B5-16 .30 ATTACHMENT 4 Section 1 .17 Reconfiguration Scope ofWork."Reconfiguration Scope of Work" means the Copelands' completion of the demolition of the 861/863 Palm Building (preserving the Shangha i Low Restaurant sign for use as contemplated in the 2009 EIR), creation of new parking on th e 861/863 Palm Parcel and reconfiguration of the public parking on the Palm Real Propert y (including without limitation supplying and installing the required parking meter poles) in Lots 3 and 11 as shown on Exhibit D to the Monterey Parcels Agreement pursuant to issue d construction permits . Section 1 .18 TitleCompany ."Title Company" means First American Title Company , National Commercial Services, 1850 Mt . Diablo Blvd Suite 300, Walnut Creek, Californi a 94596,or such other title company doing business in San Luis Obispo County, California, as Cit y and Copelands may designate . ARTICLE II -PURCHASE AND SAL E Section 2 .01 Purchase and Sale .Copelands agrees to sell to City, and City agrees t o purchase from Copelands, the 861/863 Palm Parcel upon the terms and conditions set forth i n this Agreement . Section 2 .02 Purchase Price .The purchase price for the 861/863 Palm Parcel is One Dolla r ($1). The cash purchase price is only part of the consideration for this transaction ; othe r consideration for it includes the concomitant sale by City to Copelands' affiliate, SL O Chinatown, LLC, of the Monterey Real Property pursuant to the Monterey Parcels Agreement , and the execution and delivery of the Purchase and Sale Agreement for the Palm Developmen t Site . Section 2 .03 Payment .The Purchase Price shall be paid as follows : prior to the Closing , the cash due from City under Section 2 .02 of this Agreement shall be deposited by the City int o Escrow by check or in cash . Section 2 .04 Due Diligence .City acknowledges that it has performed such due diligenc e as it elects to perform as to the condition of the title to the 861/863 Palm Parcel and th e suitability of the site of the 861/863 Palm Parcel for its proposed future use as a parking lot . Subject to Copelands' completion of the Reconfiguration Scope of Work, City has, or prior t o Closing shall have, inspected, investigated and tested the condition of the soil and the geology o f the site and the presence of hazardous substances or archaeological materials and shall hav e accepted such conditions, and all aspects of the 861/863 Palm Parcel in its "AS-IS, WHERE - IS"condition with all faults and defects, whether patent or latent, known or unknown . Further , in entering into this Agreement and closing the Escrow contemplated hereunder, City expressl y represents and warrants to Copelands (i) that City is relying and shall rely solely on its own du e diligence to evaluate all aspects of the 861/863 Palm Parcel and its suitability for City's planne d use without any representations and warranties of any kind or nature concerning the 861/86 3 Palm Parcel or any aspect thereof, either express or implied, from or on behalf of Copeland o r 861/863 Palm PSA 120611 100 0 12/7/2011 3 B5-16 .31 ATTACHMENT 4 any of its employees, agents or independent contractors, except as otherwise expressly provide d in this Agreement, (ii) that neither Copeland nor any of its employees, agents or independen t contractors has made or is authorized to make any representation or warranty of any kind o r nature concerning the 861/863 Palm Parcel, any aspect thereof, or its suitability, either express o r implied, nor any warranty, representation or promises of remediation or cure including, withou t limitation, any representation or warranty regarding the geological, subsurface, environmental , architectural, engineering or other physical aspects or condition of the 861/863 Palm Parcel , including without limitation any subsidence or other issues arising from the possible presence o f a subterranean creek under or near the 861/863 Palm Parcel, the rents, income, expenses, marke t or other financial aspects or condition of the 861/863 Palm Parcel, the compliance with th e 861/863 Palm Parcel with any applicable law, code, rule or regulation including withou t limitation any environmental protection, pollution, land use, handicapped access or other laws , the zoning of the 861/863 Palm Parcel, the accuracy or completeness of any documents , information or other data concerning the 861/863 Palm Parcel or any aspect thereof furnished o r to be furnished to City by or on behalf of Copeland or any of its employees, agents o r independent contractors or in any other manner concerning the 861/863 Palm Parcel or an y aspect thereof, (iii) that any and all due diligence materials provided by the Copelands to the Cit y were and are solely for City's specific and limited use in connection with its due diligence an d evaluations concerning the 861/863 Palm Parcel, (iv) that any due diligence materials prepare d by any third party are being furnished to City as an accommodation only without any warranty b y Copeland or such third party as to the accuracy or completeness thereof, except as otherwis e expressly provided by any separate agreement between City and any such third party, and (v) that Copeland, and any agency of Copeland, shall not have any obligations whatsoever to perform an y tests, prepare any reports, make any repairs or take any other action, including governmenta l actions, or incur any expense with respect to the 861/863 Palm Parcel, except as otherwis e expressly provided in this Agreement or the Monterey Parcels Agreement, including withou t limitation the removal and disposal of certain asbestos-containing materials from the building s located on the 861/863 Parcel as required pursuant to Section 7 .02 of the Monterey Parcel s Agreement . Section 2 .05 Release . EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMEN T AND IN THE MONTEREY PARCELS AGREEMENT, CITY AND ANYONE CLAIMIN G BY, THROUGH OR UNDER CITY FULLY AND IRREVOCABLY RELEASE S COPELANDS, AND EACH OF ITS EMPLOYEES, OFFICERS, DIRECTORS , REPRESENTATIVES, AGENTS, SERVANTS, ATTORNEYS, AFFILIATES, PAREN T COMPANIES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS, AND ALL PERSONS , FIRMS, CORPORATIONS AND ORGANIZATIONS ACTING ON ITS BEHAL F ("RELEASED COPELAND PARTIES"),FROM ANY AND ALL CLAIMS THAT IT MA Y NOW HAVE OR HEREAFTER ACQUIRE AGAINST ANY OF THE RELEASE D COPELAND PARTIES FOR ANY AND ALL COSTS, LOSSES, LIABILITIES, DAMAGES , EXPENSES, DEMANDS, CLAIMS, ACTIONS OR CAUSES OF ACTION (COLLECTIVEL Y "CLAIMS")ARISING FROM OR RELATED TO THE CONDITION OF THE 861/863 PAL M PARCEL OTHER THAN THE REMOVAL AND DISPOSAL OF CERTAIN ASBESTOS - 861/863 Palm PSA 120611 100 0 12/7/2011 4 B5-16 .32 ATTACHMENT 4 CONTAINING MATERIALS FROM THE BUILDINGS LOCATED ON THE 861/86 3 PARCEL AS REQUIRED PURSUANT TO SECTION 7 .02 OF THE MONTEREY PARCEL S AGREEMENT AND SECTION 7 .01 HEREIN, INCLUDING, WITHOUT LIMITATION, AN Y PATENT OR LATENT CONSTRUCTION DEFECTS OR INADEQUACIES IN TH E CONDITION OF THE 861/863 PALM PARCEL, INCLUDING COST OF REPAIR O R CORRECTION, ERRORS, OMISSIONS, OR OTHER CONDITIONS, LATENT O R OTHERWISE, GEOTECHNICAL AND SEISMIC, SURFACE OR SUBSURFACE , AFFECTING THE 861/863 PALM PARCEL OR ANY PORTION THEREOF WHETHER O R NOT DISCOVERED PRIOR TO CITY'S INSPECTION OF THE 861/863 PALM PARCEL , INCLUDING, WITHOUT LIMITATION : (A) ENVIRONMENTAL MATTERS WHICH WERE : (I)DESCRIBED OR REFERRED TO IN THE ENVIRONMENTAL REPORTS OR I N ANY ENVIRONMENTAL AUDIT OBTAINED BY CITY; O R (II). DISCOVERABLE BY PRUDENT INVESTIGATION AT ANY TIME PRIOR TO TH E CLOSING ; OR (III)OTHERWISE DISCLOSED BY COPELANDS TO CITY OR DISCOVERED BY CIT Y AT ANY TIME PRIOR TO THE CLOSING ; (B) THE ITEMS DESCRIBED IN SECTION 2 .04 ABOVE ; AND (C) ANY ERRORS, OMISSIONS OR DEFECTS COMMITTED OR CAUSED BY ANY AGENT, EMPLOYEE, CONTRACTOR, OR OTHER PERSON PERFORMING WORK O R TAKING ACTION IN CONNECTION WITH THE 861/863 PALM PARCEL ON BEHALF O F CITY OR ITS PREDECESSORS ; NOTWITHSTANDING THE FOREGOING, SUCH RELEASE BY CITY OF RELEASE D COPELANDS PARTIES SHALL NOT EXTEND TO ANY FRAUD BY COPELANDS UPO N CITY, WHICH IS EXPRESSLY RESERVED BY CITY ON BEHALF OF ITSELF AN D ANYONE CLAIMING BY, THROUGH OR UNDER CITY . THIS RELEASE INCLUDES ANY AND ALL CLAIMS OF WHICH CITY IS PRESENTL Y UNAWARE OR WHICH CITY DOES NOT PRESENTLY SUSPECT TO EXIST WHICH, I F KNOWN BY CITY, WOULD MATERIALLY AFFECT CITY'S RELEASE OF COPELANDS . CITY SPECIFICALLY WAIVES THE PROVISION OF CALIFORNIA CIVIL COD E SECTION 1542, WHICH PROVIDES AS FOLLOWS : "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR EXPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME O F EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAV E MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR ." 861/863 Palm PSA 120611 100 0 12/7/2011 5 B5-16 .33 ACHMENT 4 IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE REFLECTS THA T ALL OF THE 861/863 PALM PARCEL IS SOLD BY COPELANDS AND PURCHASED B Y CITY SUBJECT TO THE FOREGOING . IT IS NOT CONTEMPLATED THAT THE PURCHASE PRICE WILL BE INCREASED IF COSTS TO CITY ASSOCIATED WITH TH E 861/863 PALM PARCEL PROVE TO BE LESS THAN EXPECTED NOR WILL TH E PURCHASE PRICE BE REDUCED IF THE CITY'S USE OF THE 861/863 PALM PARCE L LEADS TO HIGHER COSTS . THIS PROVISION SHALL SURVIVE THE CLOSE O F ESCROW AND RECORDING OF THE GRANT DEED . Copelands' Initials : City's Initials : ARTICLE III - TITLE TO REAL PROPERTY Section 3 .01 Conditions of Title of 861/863 Palm Parcel .Copelands shall deliver title to the 861/863 Palm Parcel to City subject to no leases and occupancies at the time of the Closing . Title to the 861/863 Palm Parcel shall be conveyed by Copelands to City by a grant deed in for m and substance shown on Exhibit D hereto (the "Grant Deed"), and subject to the followin g "Conditions of Title": (a)A lien to secure payment of real estate taxes and supplemental taxes, i f any, not delinquent ; (b)Matters affecting the condition of title created by or with the written consent of City ; an d (c)Printed exceptions and exclusions as specified on the Preliminary Titl e Report . Section 3 .02 Evidence of Title .Delivery of title to the 861/863 Palm Parcel in accordanc e with Section 3 .01 above shall be evidenced by the willingness of the Title Company its writte n commitment to issue, upon Closing, recordation of the Grant Deed, and payment of its regularl y scheduled premium, an ALTA Extended Coverage Owner's Policy in the appropriate amoun t showing title to the 861/863 Palm Parcel vested in City subject to the Conditions of Titl e described in Section 3 .01 . Section 3 .03 Title Vesting .Title shall be vested in the 861/863 Palm Parcel in the name o f City as provided above . ARTICLE IV - CLOSIN G Section 4 .01 Closing .The sale and purchase transaction contemplated by this Agreemen t shall be consummated pursuant to the Escrow Instructions not later than August 1, 2012 (th e 861/863 Palm PSA 120611 100 0 12/7/2011 6 B5-16 .34 'TACHMENT 4 "Outside Closing Date") through an escrow established at the Escrow Company . If Copeland s requests an extension of the Outside Closing Date, and provides reasonable evidence showin g that such an extension is needed or advisable to effectuate the purposes of this Agreement , including without limitation the Parties' desire to have the Closings under this Agreement and the Monterey Parcels Agreement occur concomitantly if an extension of the Outside Closin g Date is provided in connection with the Monterey Parcels Agreement, the City Manager ma y elect to extend the Outside Closing Date without further additional authorization from the Cit y Council, provided that no such extension of the Outside Closing Date be later than December 31 , 2012 unless the further authorization of the City Council is first obtained . Any such extension o f the Outside Closing Date shall be documented in a writing executed and delivered by Cit y Manager, on behalf of City, and by Copelands' authorized member . Section 4 .02 Conditions to Closing -- Copelands .The Copelands' obligation to transfer o r cause the transfer of the 861/863 Palm Parcel to the City shall be subject to the fulfillment of th e conditions precedent (the "Copelands' Conditions") set forth below : (a)Related Agreements .City shall have executed and delivered to Copelands the following agreements : (i) Monterey Parcels Agreement ; (ii) Agreement of Purchas e and Sale — Palm Development Site ; (c) Lease of 955 Morro Street ; (iv) Release and Waiver, and (v) that certain lease agreement further described in Section 3 .01(d) of th e Monterey Parcels Agreement (the "Lease for Public Parking"). (b)Closing under Monterey Parcels Agreement .City shall have taken al l actions necessary to close under the Monterey Parcels Agreement concurrently with the Closing under this Agreement . (d) Satisfaction of City's Conditions .City shall have certified to Copeland s that all of the City's Conditions have been satisfied and City is obligated to buy th e 861/863 Palm Parcel . Section 4 .03 Conditions to Closing -- City .The City's obligation to purchase the 861/86 3 Palm Parcel from the Copelands shall be subject to the fulfillment of the conditions preceden t (the "City's Conditions") set forth below : (a)Related Agreements .Copelands (or its related companies) shall have executed and delivered to City the following agreements : (i) the Monterey Parcel s Agreement ; (ii) Agreement of Purchase and Sale — Palm Parcels ; (c) Lease of 955 Morr o Street ; (iv) Release and Waiver and (v) the Lease for Public Parking . (b)Closing under Monterey Parcels Agreement .Copelands, and its relate d company, SLO Chinatown, LLC, shall have taken all actions necessary to close under th e Monterey Parcels Agreement concurrently with the Closing under this Agreement . 861/863 Palm PSA 120611 100 0 12/7/2011 7 B5-16 .35 A TACHMENT 4 (c)Condition of Property ; Title .The Title Company shall have committed t o insure good title to the 861/863 Palm Parcel by issuing a title policy in the form describe d in Section 4 .03(d) below in the amount equal to the most recent value of the 861/86 3 Palm Parcel determined per an appraisal or broker opinion of value provided to Titl e Company by City, subject only to the Conditions of Title described in Section 3 .01 . (d)Title Conditions .The Closing shall also be conditioned on th e commitment of the Title Company to issue, upon payment of its regularly schedule d premium, its owner's extended ALTA Form 1970(B) coverage policy of title insurance , with the endorsements described below, excluding all bankruptcy exceptions, showin g title to the 861/863 Palm Parcel vested of record in the transferee subject (the "Titl e Policy"). The Title Policy shall contain endorsements required by City and approved b y the City Attorney in writing . (e)Satisfaction of Copelands' Conditions .Copelands shall have certified i n writing to City that all of Copelands' Conditions have been satisfied and Copelands i s obligated to sell the 861/863 Palm Parcel . Section 4 .04 Time for Closing .The Closing shall take place fifteen (15) days after th e conditions set forth in Sections 4 .02 and 4 .03 above have been satisfied . The date of the Closing may be extended by agreement of the parties . On the Closing Date, sole and exclusiv e possession of the 861/863 Palm Parcel shall be delivered to City by Copelands . Section 4 .05 Deposits by Copelands .No later than one business day before the Closin g Date, Copelands shall deposit with Escrow Company : a)The Grant Deed in the form attached hereto as Exhibit D duly executed b y Copelands, acknowledged and in recordable form , b)Copeland's FIRPTA Affidavit in a form reasonably acceptable to City , duly executed by Copelands . c)A California Form 593-C Real Estate Withholding Exemption Certificat e on Form 593-C, or equivalent, duly executed by Copelands ("Form 593-C"). d)Such monies as are required to pay Copelands' share of the closing cost s and prorations discussed elsewhere herein . e)Such other bills of sale, assignments and other instruments of transfer o r conveyance as City may reasonably request or as may be otherwise necessary to evidenc e and effect the sale, assignment, transfer, conveyance and delivery of the 861/863 Pal m Parcel to City . 861/863 Palm PSA 120611 100 0 12/7/2011 8 B5=16.36 A TTACHMENT 4 Section 4 .06 Deposits by City .No later than one business day before the Closin g Date, City shall deposit with Escrow Company : a)The monies required pursuant to Section 2 .02, and such other monies a s are required to pay City's share of the closing costs and prorations discussed elsewher e herein . b)Counterpart originals of the document listed in Sections 4 .05(a) above . c)Such other instruments or documents as may be necessary to effect th e sale, assignment, transfer, conveyance and delivery of the 861/863 Palm Parcel to City . Section 4 .07 Escrow Company's Actions .Upon the Closing Date, when Escrow Compan y holds the items required to be deposited by Copelands and City as described above, Escro w Company is prepared to issue and deliver to City the Title Policy, and Escrow Company ha s received written authorization to close the escrow from City and from Copelands, Escro w Company is hereby instructed and authorized to : a)Record the Grant Deed in the Office of County Recorder of the County . b)Pay any transfer taxes . c)Instruct the County Recorder to return the Grant Deed to City . d)Disburse to Copelands from the funds deposited into Escrow by City th e Purchase Price less Copelands' share of prorations and other closing costs hereunder. e)Disburse from funds deposited by City amounts toward payment of al l other items chargeable to the account of City hereunder, and disburse the balance of suc h funds, if any, to City . f)Deliver to City the Non-foreign Affidavit, if any, the Form 593-C, if any , and the Title Policy. ARTICLE V - ADJUSTMENT AND PRORATION S At Closing, the following items shall be adjusted and prorated between City an d Copelands by Escrow Company : Section 5 .01 Taxes .Taxes and assessments on the 861/863 Palm Parcel for the perio d prior to the Closing shall be prorated as of the Closing Date . 861/863 Palm PSA 120611 100 0 12/7/2011 9 B5-16 .37 ATTACHMENT 4 Section 5 .02 Utilities and Contracts .All costs, if any, of utilities furnished to the 861/86 3 Building before it is demolished as provided in the Monterey Parcels Agreement shall be paid o r payable by Copelands, whether incurred before or after the Closing Date . All costs, if any, of an y other utilities furnished to the 861/863 Palm Parcel shall be prorated as of the Closing Date . ARTICLE VI - CLOSING COSTS ; NO BROKER S Section 6 .01 Copelands' Costs .At Closing, Copelands shall pay the following costs o f Closing : all fees and costs for releasing all encumbrances, liens and security interests of recor d which are not allowable Conditions to Title, all applicable sales, use, documentary or othe r transfer taxes arising out of the sale of the Real Property and all fees to the Escrow Company, th e premium for the Title Policy issued to the City for the 861/863 Palm Parcel and an y endorsements required by City . Section 6 .02 No Brokerage Commissions .Each of City and Copelands represents an d warrants to the other that it has not dealt with or been represented by any brokers or finders i n connection with the purchase and sale of the Property . Each Party shall indemnify and hold th e other free and harmless from and against all costs and liabilities including, without limitation , attorneys' fees and the costs and expenses of litigation, for causes of action or proceedings whic h may be instituted by any other broker, agent or finder, licensed or otherwise, claiming through , under or by reason of the conduct of the indemnifying Party in connection with this transaction . Section 6 .03 Other Closing Costs .Any and all other closing costs related to the transactio n shall be paid by the Parties in the manner consistent with customary practice in San Luis Obisp o County. Section 6 .04 Post-Closing Prorations .Should any real estate taxes, bonds, assessments , utilities, other expenses of the 861/863 Palm Parcels or liens relating to periods before th e Closing Date be omitted from such prorations for any reason, including without limitation lat e assessment or Title Company error, then after the Closing, Copelands shall remain solel y responsible for, and shall promptly pay before delinquency, any such real estate taxes, bonds , assessments, utilities, other expenses of the Property or liens relating to periods before th e Closing Date. This obligation shall survive the Closing . ARTICLE VII - POST CLOSING OBLIGATION S Section 7 .01 Reconfigure Parking ; Removal of Asbestos .Promptly after the Closing Date , Copelands shall begin, and shall thereafter diligently continue until completion, th e Reconfiguration Scope of Work . Copelands shall pay all costs of and associated with th e Reconfiguration Scope of Work (including without limitation supplying and installing th e required parking meter poles), except City will supply and install the parking meter heads at it s cost . Prior to the demolition of the 861/863 Building, Copelands shall also be responsible for th e removal of such asbestos containing building materials as are disclosed in that certain letter , dated November 11, 2011, from West Coast Safety Consultants (the "Asbestos Report"), t o 861/863 Palm PSA 120611 100 0 12/7/2011 10 B5-16 .38 i A CHMENT 4 Copelands Properties, with respect to its inspection for asbestos containing building materials a t two commercial structures located at 76l and 763 Palm Street [sic], San Luis Obispo, California , such removal and disposition of such materials to be completed in compliance with applicabl e law, at Copelands' sole expense . Section 7 .02 Survival of Obligations Post-Closing .Without limitation, the obligations o f Copelands set forth in this Article VII shall survive the Closing of the Escrow and th e recordation of the Grant Deed . ARTICLE VIII - INDEMNIFICATION S Section 8 .01 Indemnification by Copelands .As of the Closing Date, Copelands shal l indemnify, defend and hold City harmless of, against and from any and all liabilities, claims , demands and expenses, of any kind or nature (except those items which by this Agreemen t specifically become the obligation of City) accruing on or before the Closing Date, including an y claim for labor, materials or supplies in connection with the Reconfiguration Scope of Work, an d which are in any way related to the ownership or operation of the 861/863 Palm Parcel and fo r any claim for labor, materials or supplies in connection with work performed by Copelands or it s agents or contractors on the 861/863 Palm Parcel after the Closing in connection with Copelands ' obligations to complete the Reconfiguration Scope of Work . Without limitation, from and afte r the date of execution of this Agreement, Copelands shall also indemnify and defend City, usin g counsel approved by City in its absolute discretion, from any and all third party challenges to thi s Agreement or any of the transactions contemplated hereunder or any challenge to an y entitlement, approval and/or environmental impact report ("EIR") proposed, drafted, certified o r certified in connection with any of the foregoing transactions, including any supplement o r addenda thereto . Section 8 .02 Indemnification by City .As of the Closing Date, City shall indemnify, defen d and hold Copelands harmless of, against and from any and all liabilities, claims, demands an d expenses of any kind or nature (except those items which by this Agreement specifically remai n the obligation of Copelands) accruing after the Closing Date, including any claim for labor , materials or supplies in connection with work performed on the 861/863 Palm Parcel by the Cit y (but not by Copelands or its agents or contractors), and all expenses related thereto including , without limitation, court costs and attorneys' fees . ARTICLE IX - REMEDIE S Section 9 .01 Right to Cure .Should either Party default under any of its obligation s hereunder other than its obligation to close by the Outside Closing Date, the other Party shal l provide notice of such default to the defaulting Party, who will be allowed to cure any suc h default for a period of three (3) business days after notice is given the defaulting Party . No grac e or cure period is allowed for the failure of either Party to cause the Closing to occur prior to or o n the Outside Closing Date . 861/863 Palm PSA 120611 100 0 12/7/2011 11 B5-16 .39 ATTACHMENT 4 Section 9 .02 Termination .Should the Closing not occur on or before the Outside Closin g Date for any reason other than the default of Copelands under this Agreement, the Montere y Parcels Agreement or the Palm Development Site Agreement, then this Agreement shall b e terminated, and City shall have no rights to bring any action seeking specific performance of thi s Agreement or damages for its breach . Copelands and City agree that in the event the Closing fails to occur because of Copelands ' default, breach or failure to perform hereunder or pursuant to the Monterey Parcels Agreement o r the Palm Development Site Agreement (prior to the expiration of any applicable grace or cur e period), and not due to City's wrongful acts, omissions or breach, then City shall have the right t o seek specific performance of this Agreement, or damages for its breach, or both, and withou t limitation to record a lis pendens encumbering title to the 861/863 Palm Parcel to City pendin g the outcome of any such action . Section 9 .03 Remedies upon Termination .In the event of any termination of thi s Agreement not caused by the default of either of the Parties hereto which is not cured within an y applicable cure period, this Agreement shall be of no further force or effect, and neither of th e Parties shall have any recourse against the other nor any right to file a lis pendens or to bring a n action for specific performance hereunder . Should either Party default under its obligation s pursuant to this Agreement, and should such default result in the Closing failing to occur prior t o the Outside Closing Date, then the non-defaulting Party shall have the right to bring an actio n against the defaulting Party seeking specific performance of this Agreement . Section 9 .04 Post-Closing Remedies .In the event that Copelands defaults in performin g any of its post-closing obligations under this Agreement or pursuant to the Monterey Parcel s Agreement or the Palm Development Site Agreement, and fails to cure any such default withi n the cure period provided pursuant to Section 9 .01, then City shall have the right to seek specifi c performance as well as any other rights or remedies to which City may be entitled unde r applicable law. In addition to, and not in lieu of the foregoing, should Copelands fail to complet e any of its post-closing obligations stated in Article VII timely, such failure shall constitute a default by Copelands hereunder, and City shall have the right to terminate the purchas e agreement for the Palm Development Site Agreement, to keep any and all deposits and optio n payments previously made by Copelands in connection therewith, and to retain title to th e 861/863 Palm Parcel . ARTICLE X - COPELANDS' REPRESENTATIONS AND WARRANTIE S Section 10 .01 Representations and Warranties of Copelands .Copelands makes the following representations and warranties to City : a) Copelands is a California limited liability company duly organized an d validly existing under the laws of the State of California, and is qualified to do busines s in the State of California . 861/863 Palm PSA 120611 100 0 12/7/2011 12 B5-16 .40 A ... fACHMENT 4 b)Copelands has the right, power and authority to enter into this Agreemen t and to perform its obligations hereunder, and the person(s) executing this Agreement o n behalf of Copelands have the right, power and authority to do so . c)Copelands has not encumbered, transferred, optioned, assigned o r otherwise conveyed its interest or any portion of its interest in the 861/863 Palm Parcel o r any portion thereof except as stated in the Preliminary Report, nor has Copelands entere d into any agreement (other than this Agreement) to do so . Without limitation of th e foregoing, Copelands has provided no right or option to purchase the 861/863 Pal m Parcel, or any part thereof, to any third person including any tenant of any portion of the 861/863 Palm Parcel . d)To Copelands' actual knowledge, the 861/863 Palm Parcel is not in violation , nor has been or is currently under investigation for violation of any federal, state or local law , ordinance or regulation relating to industrial hygiene, worker health and safety, or to th e environmental conditions in, at, on, under or about the 861/863 Palm Parcel including, bu t not limited to, soil and groundwater conditions ; the 861/863 Palm Parcel has not been subject to a deposit of any Hazardous Substance . Neither Copelands nor, to Copelands' actua l knowledge, any third party has used, generated, manufactured, stored or disposed in, at, on , under or about the 861/863 Palm Parcel or transported to or from the 861/863 Palm Parce l any Hazardous Substance other than in compliance with all applicable laws . To Copelands ' actual knowledge, there has been no discharge, migration or release of any Hazardou s Substance from, into, on, under or about the 861/863 Palm Parcel . Except as described in th e Asbestos Report attached hereto as Exhibit E hereto, to Copelands' actual knowledge, ther e is not now, nor has there ever been on or in the 861/863 Palm Parcel underground storag e tanks or surface impoundments, any asbestos-containing materials or any polychlorinate d biphenyls used in hydraulic oils, electrical transformers or other equipment . Copelands assigns to City, effective upon the Closing, all claims, counterclaims, defenses or actions , whether at common law, or pursuant to any other applicable federal or state or other law s which Copelands may have against any third parties relating to the existence of an y Hazardous Substance in, at, on, under or about the 861/863 Palm Parcel . e)Copelands is not in default under, nor has Copelands received any notice tha t any event has occurred which with the giving of notice or the passage of time, or both, woul d constitute a default under, any contract, transaction, agreement, covenant, condition , restriction, lease, easement, encumbrance or instrument pertaining to the 861/863 Pal m Parcel . f)There are no lawsuits, claims, suits, proceedings or investigations pendin g nor, to the Copelands' actual knowledge, threatened against or affecting Copelands or any o f the 861/863 Palm Parcel nor, to Copelands' actual knowledge, is there any basis for any o f 861/863 Palm PSA 120611 100 0 12/7/2011 13 B5-16.41 fACHMENT 4 the same . There are no lawsuits, suits or proceedings pending in which Copelands is th e plaintiff or claimant and which relate to the 861/863 Palm Parcel . g)This Agreement constitutes the legal, valid and binding obligation o f Copelands enforceable against Copelands in accordance with its terms, except to the exten t that such enforcement may be limited by applicable bankruptcy, insolvency, moratorium an d other principles relating to or limiting the rights of contracting parties generally . Neither this Agreement nor the consummation of any of the transactions contemplated hereby violates o r shall violate any provision of any agreement or document to which Copelands is a party or t o which Copelands is bound . No consent from any third party is required before the Montere y Real Property may be purchased by Copelands . h)Copelands is not bankrupt or insolvent under any applicable Federal or stat e standard . Copelands has not filed for protection or relief under any applicable bankruptcy o r creditor protection statute . Copelands has not been threatened by creditors with a n involuntary application of any applicable bankruptcy or creditor protection statute . Copelands is not entering into the transactions described in this Agreement with an intent t o defraud any creditor or to prefer the rights of one creditor over any other . City and Copelands have negotiated this Agreement at arms' length and the consideration to be pai d represents fair value for the assets to be transferred . All representations and warranties of Copelands in this Agreement are made as of the date of thi s Agreement and as of the Closing, and shall survive the Closing and the recordation of the Gran t Deed . It shall be a material default if Copelands is unable to make such representations an d warranties truthfully as of the Closing Date . ARTICLE XI - MISCELLANEOU S Section 11 .01 Notices .All notices, demands or other communications of any typ e (collectively "Notices") given by Copelands to City or by City to Copelands, whether required b y this Agreement or in any way related to this transaction, shall be sufficient if in writing an d delivered by hand or Federal Express or similar courier service to the person to whom the Notic e is directed or mailed by United States Mail, as a Registered or Certified item, Return Receip t Requested, at or to the addresses specified in this section . Notices delivered by mail shall b e deposited in a Post Office or other depository under the care or custody of the United State s Postal Service, enclosed in a wrapper with proper postage affixed, addressed as follows : City : City of San Luis Obisp o 990 Palm Stree t San Luis Obispo, California 9340 1 Attention : City Manage r With copies to : City Attorney 861/863 Palm PSA 120611 100 0 12/7/2011 14 B5-16 .42 T ACHN{ENT 4 990 Palm Street San Luis Obispo, California 9340 1 Copelands : Thomas M . Copeland, Manage r CP Monterey Morro, LL C Post Office Box 1226 0 San Luis Obispo, California 9340 6 With Copies to : Suzanne Fryer Copelands' Propertie s 1026 Chorro Street, Suite 20 0 Post Office Box 1226 0 San Luis Obispo, California 9340 6 Section 11 .02 Governing Law ; Plurality ; and Gender .This Agreement shall be construe d and interpreted in accordance with the laws of the State of California . Where required for prope r interpretation, words in the singular shall include the plural ; the masculine gender shall includ e the neuter and the feminine, and vice versa . Section 11 .03 Amendment .This Agreement may not be modified or amended, except by a n agreement in writing signed by the parties to this Agreement . The parties may waive any of th e conditions contained in this Agreement or any of the obligations of the other party under thi s Agreement, but any such waiver shall be effective only if in writing and signed by the part y waiving such conditions or obligations . Section 11 .04 Authorization .The person executing this Agreement on behalf of City hereb y warrants and represents to Copelands that all necessary legal prerequisites to that party's execution of this Agreement have been satisfied and that he or she is fully authorized to do s o and to bind the party of whose behalf he or she signs . The person executing this Agreement o n behalf of City claims to do so to the extent the authority to do so has been duly delegated to tha t person by the City Council of the City in accordance with applicable law . Section 11 .05 Time of Essence .Time is of the essence in this Agreement . Section 11 .06 Attorneys' Fees for Transactions and for Disputes .Copelands shall pay all o f the City's outside counsel's fees and costs incurred in connection with the documentation an d negotiation of this Agreement as of the date of the execution of this Agreement upon the City's execution and delivery of this Agreement to Copelands, and all of City's other outside counse l fees at Closing . If it becomes necessary for either party to file a suit to enforce this Agreemen t or any provisions contained in this Agreement, or to seek damages for a breach, the prevailin g party shall be entitled to recover, in addition to all other remedies or damages, reasonabl e attorneys' fees incurred in such suit . 861/863 Palm PSA 120611 100 0 12/7/2011 15 B5-16 .43 I HMENT 4 Section 11 .07 Consent to Jurisdiction .Copelands and City agree that any suit, action o r other legal proceeding arising out of or in connection with this Agreement may be brought, an d shall be brought only, in a superior or municipal court of the County of San Luis Obispo, State o f California and hereby consent to the jurisdiction of any such court in any such suit, action o r proceedings . Copelands and City hereby waive any objection which such party may have to th e laying of any such suit, action or proceeding in any such court . Section 11 .08 Captions .The description headings of the several Articles, Sections an d Paragraphs contained in this Agreement are inserted for convenience only and shall not control o r affect the meaning or construction of any of the provisions of this Agreement . Section 11 .09 Entire Agreement .Except for the agreements also described in thi s Agreement, this Agreement, including the Exhibits attached to this Agreement, constitutes th e entire agreement among the parties pertaining to the subject matter of this Agreement an d supersedes all prior and contemporaneous agreements and understandings of the parties i n connection therewith, including but not limited to that certain Option to Purchase Real Property , dated as of November 5, 2003, Modification to Option to Purchase Real Property, dated as o f April 3, 2008, Second Modification to Option to Purchase Real Property, dated as of July 1, 200 8 and Third Modification to Option to Purchase Real Property, dated as of July 1, 2011 . N o representation, warranty, covenant, agreement or condition not expressed in this Agreement shal l be binding upon the parties to this Agreement or shall affect or be effective to interpret, chang e or restrict the provisions of this Agreement . Section 11 .10 Counterparts .A counterpart of this Agreement with separate but full y executed signature pages attached thereto shall have the full force and effect of an origina l executed instrument . Section 11 .11 Successors and Assigns .This Agreement shall not be assignable by eithe r party, and nothing contained herein shall inure to the benefit of other parties . Section 11 .12 Tax Reporting .Escrow Company is designated the "real estate reportin g person" for purposes of Section 6045 of the Internal Revenue Code of 1986, as amended, an d Treasury Regulations Section 1 .6045 4, and any instructions or settlement statement prepared b y Escrow Company shall so provide . Escrow Company shall be responsible for filing Form 1099 S with the Internal Revenue Service ARTICLE XII - EXHIBIT S All Exhibits shall be approved by each party, which approval shall be evidenced by suc h party's initials on each Exhibit hereto . Exhibit A Legal Description of 861/863 Palm Parce l Exhibit B Preliminary Title Report 861/863 Palm PSA 120611 100 0 12/7/2011 16 B5-16 .44 Al TACHMENT 4 Exhibit C Map showing Land Affected by this Agreemen t Exhibit D Grant Dee d Exhibit E Asbestos Report This Agreement is executed by the parties as of the date first written above . CP MONTEREY MORRO, LLC , a California limited liability compan y By : Thomas M . Copelan d Its : Manager CITY OF SAN LUIS OBISPO , a municipal corporation and Charter City By : Mayo r Attest : By : City Clerk Approved as to Form : By : City Attorne y 861/863 Palm PSA 120611 100 0 12/7/2011 17 B5-16 .45 ATTACHMENT 4 TABLE OF CONTENT S ARTICLE I - DEFINITIONS 1 Section 1 .01 861/863 Palm Building 1 Section 1 .02 861/863 Palm Parcel 1 Section 1 .03 Closing 1 Section 1 .04 Closing Date 1 Section 1 .05 Closing Payment 1 Section 1 .06 Escrow 1 Section 1 .07 Escrow Company 1 Section 1 .08 Escrow Instructions 2 Section 1 .09 Monterey Parcels Agreement 2 Section 1 .10 Monterey Real Property 2 Section 1 .11 Palm Development Site 2 Section 1 .12 Palm Real Property 2 Section 1 .13 Palm Development Site Agreement 2 Section 1 .14 Preliminary Title Report 2 Section 1 .15 Purchase Price 2 Section 1 .16 Real Property 2 Section 1 .17 Reconfiguration Scope of Work 3 Section 1 .18 Title Company 3 ARTICLE II - PURCHASE AND SALE 3 Section 2 .01 Purchase and Sale 3 Section 2 .02 Purchase Price 3 Section 2 .03 Payment 3 Section 2 .04 Due Diligence 3 Section 2 .05 Release 4 ARTICLE III - TITLE TO REAL PROPERTY 6 Section 3 .01 Conditions of Title of 861/863 Palm Parcel 6 Section 3 .02 Evidence of Title 6 Section 3 .03 Title Vesting 6 ARTICLE IV - CLOSING 6 Section 4 .01 Closing 6 Section 4 .02 Conditions to Closing -- Copelands 7 Section 4 .03 Conditions to Closing -- City 7 Section 4 .04 Time for Closing 8 Section 4 .05 Deposits by Copelands 8 Section 4 .06 Deposits by City 9 Section 4 .07 Escrow Company's Actions 9 ARTICLE V - ADJUSTMENT AND PRORATIONS 9 Section 5 .01 Taxes 9 Section 5 .02 Utilities and Contracts 1 0 ARTICLE VI - CLOSING COSTS ; NO BROKERS 1 0 Section 6 .01 Copelands' Costs 1 0 Section 6 .02 No Brokerage Commissions 1 0 Section 6 .03 Other Closing Costs Section 6 .04 Post-Closing Prorations 1 0 861/863 Palm PSA 120611 100 0 12/7/2011 18 B5-16 .46 ATTACHMENT 4 ARTICLE VII - POST CLOSING OBLIGATIONS 1 0 Section 7 .01 Reconfigure Parking ; Removal of Asbestos I 0 Section 7 .02 Survival of Obligations Post-Closing 1 1 ARTICLE VIII - INDEMNIFICATIONS 1 1 Section 8 .01 Indemnification by Copelands 1 1 Section 8 .02 Indemnification by City 1 1 ARTICLE IX - REMEDIES 1 1 Section 9 .01 Right to Cure 1 1 Section 9 .02 Termination 1 2 Section 9 .03 Remedies upon Termination 1 2 Section 9 .04 Post-Closing Remedies 1 2 ARTICLE X - COPELANDS' REPRESENTATIONS AND WARRANTIES 1 2 Section 10 .01 Representations and Warranties of Copelands 1 2 ARTICLE XI - MISCELLANEOUS 1 4 Section 11 .01 Notices 1 4 Section 11 .02 Governing Law ; Plurality ; and Gender 1 5 Section 11 .03 Amendment 1 5 Section 11 .04 Authorization 1 5 Section 11 .05 Time of Essence 1 5 Section 11 .06 Attorneys' Fees for Transactions and for Disputes 1 5 Section 11 .07 Consent to Jurisdiction 1 6 Section 11 .08 Captions 1 6 Section 11 .09 Entire Agreement 1 6 Section 11 .10 Counterparts 1 6 Section 11 .11 Successors and Assigns 1 6 Section 11 .12 Tax Reporting 1 6 ARTICLE XII - EXHIBITS 1 6 861/863 Palm PSA 120611 100 0 12/7/2011 19 B5-16 .47 ATTACHMENT 4 AGREEMENT OF PURCHASE AND SAL E Palm Development Sit e This Agreement ("Agreement") is made and entered into as of December , 2011, by and between SLO CHINATOWN, LLC, a California limited liability company ("Copelands"), and th e CITY OF SAN LUIS OBISPO, a municipal corporation and charter city ("City"). City and Copelands are each a "Party" hereto, and are sometimes collectively referred to as "Parties". AGREEMENT ARTICLE I - DEFINITION S The following terms shall have the meanings set forth in this Article I when used in thi s Agreement : Section 1 .01 861/863 Palm Building."861/863 Palm Building" means any and all structure s located on the 861/863 Palm Parcel, commonly referred to as the "Yung building". The 861/86 3 Palm Buildings are scheduled for demolition and will no longer be located on the 861/863 Pal m Parcel at the time of Closing pursuant to this Agreement . Section 1 .02 861/863 PalmParcel ."861/863 Palm Parcel" means that certain real propert y generally described as 861 and 863 Palm Street, San Luis Obispo, California, APN #002-416 - 031, which is currently owned by CP Monterey Mono, LLC, a California limited liability company, which has the same owners as Copelands, but which will be owned by the City at th e time of Closing . The legal description of the 861/863 Palm Parcel is attached hereto as Exhibit A . Section 1 .03 861/863 Palm Parcel Agreement ."861/863 Palm Parcel Agreement" mean s that certain Agreement of Purchase and Sale — 861/863 Palm Parcels, to be executed and delivered between the City and CP Monterey Morro, LLC, pursuant to which Copelands will sel l the 861/863 Palm Parcel to the City . Section 1 .04 Closing ."Closing" means the date upon which and the process by whic h Escrow Company will conclude and consummate the purchase and sale of the Palm Developmen t Site and as more fully described in Article IV below . Section 1 .05 Closing Date ."Closing Date" shall mean the date on which the Closing occurs . Section 1 .06 Closing Payment ."Closing Payment" means the monetary consideration to be paid by Copelands to City for the Palm Development Site as more fully described in Section 2 .0 4 below . Palm Dev Site OCC 120711 1000 100 0 12/7/2011 1 B5-16 .48 ATTACHMENT 4 Section 1 .07 Escrow."Escrow" means the escrow to be established at Escrow Company fo r the transfer of the Palm Development Site as defined below . The Escrow shall be established b y Copelands not later than fifteen (15) business days prior to the Closing Date . Section 1 .08 EscrowCompany ."Escrow Company" means First American Title Insurance Company, National Commercial Services, 1850 Mt . Diablo Blvd Suite 300, Walnut Creek, California 94596, or such other escrow company doing business in San Luis Obisp o County, California, as Copelands and City may designate . Section 1 .09 Escrow Instructions ."Escrow Instructions" means the directions to the Escro w Company provided herein and in such additional instructions prepared by Escrow Company an d approved by the Parties . This Agreement shall constitute joint escrow instructions to Escro w Company . The Parties shall execute such additional instructions not inconsistent with th e provisions of this Agreement which may be reasonably required by Escrow Company . Th e Parties shall be bound by Escrow Company's general instructions, but if any conflict between th e provisions of this Agreement and the provisions of Escrow Company's general instructions exist s or arises, then the provisions of this Agreement shall control . Section 1 .10 Monterey Improvements ."Monterey Improvements" means those certain improvements to be constructed by Copelands on the Monterey Parcels as entitled by San Lui s Obispo City Council Resolution No . 10128 (2009 Series), adopted November 17, 2009, or a s such entitlements subsequently may be modified and approved by the City in the normal exercis e of its development review authority following request therefor by Copelands . Section 1 .11 Monterey ParcelsAgreement ."Monterey Parcels Agreement" means tha t certain Agreement of Purchase and Sale — Monterey Parcels, to be executed and delivere d between the City and Copelands . Section 1 .12 Monterey Real Property ."Monterey Real Property" means the land an d appurtenant rights, interests, easements, tenements, estates and improvements which consist o f the portion of the Real Property which is adjacent to Monterey Street, as identified wit h particularity in the Monterey Parcels Agreement, and, prior to the Closing under this Agreement , will have been transferred by the City to Copelands, will no longer contain a City surface parkin g lot, but will be improved with the Monterey Improvements . Section 1 .13 Palm DevelopmentSite ."Palm Development Site" means the land an d appurtenant rights, interests, easements, tenements, estates and improvements to be acquired b y Copelands which consist of the Palm Real Property and the 861/863 Palm Parcels . The legal description of the Palm Development Site shall be prepared and approved by the parties heret o following a survey of the Real Property as described in the Monterey Parcels Agreement, an d thereupon shall be attached to this Agreement and incorporated as if set forth in full herein . Palm Dev Site OCC 120711 1000 100 0 12/7/2011 2 B5-16 .49 A"N IACHMENT 4 Section 1 .14 Palm Real Property ."Palm Real Property" means the portion of the Rea l Property which does not include the Monterey Real Property . The legal description of the Pal m Real Property shall be prepared and approved by the parties hereto following a survey of the Rea l Property as described in the Monterey Parcels Agreement, and thereupon shall be attached to thi s Agreement and incorporated as if set forth herein as Exhibit B . Section 1 .15 Preliminary Title Report ."Preliminary Title Report" means the Preliminary Report on the Palm Real Property prepared by First American Title Insurance Company, date d November 21, 2011, as Commitment No .: NCS-512999-CC , attached hereto as Exhibit C-1 an d the Preliminary Report on the 861/863 Palm Parcel, prepared by First American Title Insuranc e Company, dated November 4, 2011, as Commitment No .: NCS-512995-CC, attached hereto a s Exhibit C-2 . Section 1 .16 Purchase Price ."Purchase Price" means the monetary consideration to be pai d by Copelands to City for the Palm Development Site as more fully described in Section 2 .0 2 below. Section 1 .17 Real Property."Real Property" means the land and appurtenant rights an d improvements which consists of five (5) parcels located in the block between Palm and Montere y Streets and Morro and Chorro Streets in San Luis Obispo County, California and identified a s two (2) portions of APN #002-416-034, and three (3) portions of APN #002-416-029, a s described in the Monterey Parcels Agreement . Section 1 .18 TitleCompany ."Title Company" means First American Title Company , National Commercial Services, 1850 Mt . Diablo Blvd Suite 300, Walnut Creek, Californi a 94596, or such other title company doing business in San Luis Obispo County, California, a s Copelands and City may designate . ARTICLE II -PURCHASE AND SAL E Section 2 .01 Purchase and Sale .City agrees to sell to Copelands, and Copelands agrees t o purchase from City, the Palm Development Site upon the terms and conditions set forth in thi s Agreement . Section 2 .02 Purchase Price .The purchase price for the Palm Development Site is Fou r Hundred Fifty-three Thousand Two Hundred and One Dollars ($453,201), plus an amount equa l to Three Hundred Sixty-six and 67/100 Dollars ($366 .67) for each month or part thereof fro m (and including) July, 2011, until the month in which the Closing occurs to be paid all cas h through the Escrow at the Closing . Section 2 .03 Payment for Mitigation of Public Parking Removal .In addition to the Purchase Price, Copelands shall pay in cash through the Escrow at the Closing the "Palm Parkin g Mitigation Payment") (as defined below) to City . The Palm Parking Mitigation Payment is a fe e Palm Dev Site OCC 120711 1000 100 0 12/7/2011 3 B5-16 .50 i'ACHMENT 4 that shall be the amount paid at the Closing to compensate the City for a portion of the 15 5 displaced surface parking spaces (the "Displaced Surface Parking") that will be removed as a result of project construction on the Palm Development Site, as identified in Table 3 .2-4 of th e Addendum to the Environmental Impact Report for the Real Property, dated September, 200 9 (the "2009 EIR"). The Palm Parking Mitigation Payment will be equal to $17,796 (as adjuste d below) multiplied by the number of Palm Lost Spaces (as defined below). The Partie s acknowledge that certain parking spaces on the Palm Development Site will be permanently los t as a result of the redevelopment contemplated hereunder (the "Palm Lost Spaces"). The numbe r of Palm Lost Spaces shall be equal to 155 minus the number of parking spaces lost as a result o f the planned reconfiguration of the City's existing surface parking lot as provided in the Montere y Parcels Agreement (the "Monterey Lost Spaces'). By way of example, if there are 41 Montere y Lost Spaces, then the Palm Lost Spaces will be equal to 114 . (For avoidance of doubt, the Pal m Lost Spaces, and the Palm Parking Mitigation Payment provided for herein, are in addition to an d exclusive of the Monterey Lost Spaces and the Monterey Parking Mitigation Payment provide d for in the Monterey Parcels Agreement .) The Monterey Lost Spaces will be as shown on th e parking reconfiguration diagram to be attached to the Monterey Parcels Agreement as Exhibit D . $17,796 is the current in-lieu parking fee as adopted by the City, which amount will increase a s of July 1, 2012, and each July thereafter, due to an inflation escalator adopted as part of th e City's fee resolutions duly adopted by the City Council, until the Closing Date occurs . If there are 141 Palm Lost Spaces, the Parties estimate that the Palm Parking Mitigation Payment will be no t less than Two Million Twenty-eight Thousand Seven Hundred Forty-four Dollars ($2,028,744), and acknowledge the amount shall increase as the City's in-lieu parking fee increases over time . Unmet parking demand caused by the Project does not include any of the Displaced Surfac e Parking and therefore, for avoidance of doubt, the parties acknowledge that the Palm Parkin g Mitigation Payment required hereunder is and shall be separate from, and in addition to, an y parking in-lieu fees required by City or any of its departments charged with granting permit s required for the Project in connection with any unmet parking demand caused by the Project . Section 2 .04 Payment .The Purchase Price plus the Palm Parking Mitigation Payment (collectively, the "Closing Payment") shall be paid as follows : at least one business day prior t o the Closing, the cash due from Copelands under Sections 2 .02 and 2 .03 of this Agreement shal l be deposited by the Copelands into Escrow by wire transfer or cashier's check . Section 2 .05 No Restrictions on City's Use of Property Prior to Closing .City's use and management of the Palm Development Site prior to the Closing shall not be restricted or limite d in any way by the terms of this Agreement, subject only to City taking no irreversible action tha t would preclude its ability to deliver title to the Palm Development Site as contemplated i n Section 3 .01 of this Agreement . For avoidance of doubt, and without limitation of the foregoing , City may pursue and enter into lot mergers, reciprocal access agreements, leases, ground leases , licenses and any other land use management action deemed appropriate in the sole and absolut e discretion of City prior to the Closing hereunder . Palm Dev Site OCC 120711 1000 1000 12/7/2011 4 B5-16 .51 AT TACHMENT 4 Notwithstanding the foregoing, Copelands will lease a portion of the Palm Real Property whic h consists of the property commonly known as 955 Morro, San Luis Obispo, from the Cit y pursuant to that certain Lease attached hereto as Exhibit E (the "955 Mono Lease"). The 95 5 Morro Lease shall provide for nominal rent of $500 per month and Copelands will be responsibl e for upkeep, maintenance and insurance on the building which is the Premises . Sublease revenu e for the Premises in excess of nominal rent and expenses will be split 50/50 between the City an d Copelands . Copelands will consult with City about potential tenants yet Copelands will contro l and have sole discretion on tenant selection consistent with applicable zoning and other City law s and regulations . Parking adjacent to 955 Morro will continue to be used by the City until th e Palm Development Site is transferred to Copelands . The term of the 955 Morro Lease will end on the Closing Date, or, if this Agreement terminates, may be terminated by written notice . Section 2 .06 Due Diligence ; Condition of Property.Copelands acknowledges that, prior t o the Closing, it shall have performed such due diligence as it elects to perform as to the conditio n and all other aspects of the Palm Development Site, the title to the Palm Development Site an d the suitability of the site of the Palm Development Site for the proposed uses and construction . Copelands further acknowledges that prior to the Closing contemplated hereunder, Copeland s owned the 861/863 Palm Parcel, which it transferred to the City, and further that Copeland s undertook to remove certain asbestos from the buildings located on 861/863 Palm Parcel a s described in the 861/863 Palm Parcel Agreement and the Monterey Parcels Agreement, and prio r to the Closing shall have completed its obligations thereunder . Copelands further acknowledge s that it has or shall have and shall have inspected, investigated and tested the condition of the soi l and the geology of the site and the presence of hazardous substances or archaeological material s and shall have accepted such conditions "AS-IS, WHERE-IS"condition with all faults an d defects, whether patent or latent, known or unknown . Further, in entering into this Agreemen t and closing the Escrow contemplated hereunder, Copelands expressly represents and warrants t o City (i) that Copelands is relying and shall rely solely on its own due diligence to evaluate al l aspects of the Palm Development Site and its suitability for Copelands' planned developmen t without any representations and warranties of any kind or nature concerning the Pal m Development Site or any aspect thereof, either express or implied, from or on behalf of City o r any of its employees, agents or independent contractors, except as otherwise expressly provide d in this Agreement, (ii) that neither City nor any of its employees, agents or independen t contractors has made or is authorized to make any representation or warranty of any kind o r nature concerning the Palm Development Site, any aspect thereof, or its suitability, either expres s or implied, nor any warranty, representation or promises of remediation or cure including , without limitation, any representation or warranty regarding the geological, subsurface , environmental, architectural, engineering or other physical aspects or condition of the Pal m Development Site, including without limitation any subsidence or other issues arising from th e possible presence of a subterranean creek under or near the Palm Development Site, the rents , income, expenses, market or other financial aspects or condition of the Palm Development Site , the compliance with the Palm Development Site with any applicable law, code, rule or regulatio n including without limitation any environmental protection, pollution, land use, handicappe d Palm Dev Site OCC 120711 1000 100 0 12/7/2011 5 B5-16 .52 AT TACHMENT 4 access or other laws, the zoning of the Palm Development Site, the accuracy or completeness o f any documents, information or other data concerning the Palm Development Site or any aspec t thereof furnished or to be furnished to Copelands by or on behalf of City or any of its employees , agents or independent contractors or in any other manner concerning the Palm Development Sit e or any aspect thereof, (iii) that any and all due diligence materials provided by the City t o Copelands were and are solely for Copelands' specific and limited use in connection with its due diligence and evaluations concerning the Palm Development Site, (iv) that any due diligenc e materials prepared by any third party is being furnished to Copelands as an accommodation onl y without any warranty by City or such third party as to the accuracy or completeness thereof, except as otherwise expressly provided by any separate agreement between Copelands and an y such third party, and (v) that City, and any agency of City, shall not have any obligation s whatsoever to perform any tests, prepare any reports, make any repairs or take any other action, including governmental actions, or incur any expense with respect to the Palm Development Site , except as otherwise expressly provided in this Agreement . Section 2 .07 Release .EXCEPT AS EXPRESSLY PROVIDED IN THI S AGREEMENT OR IN THE LEASE FOR 955 MORRO, COPELANDS AND ANYONE CLAIMING BY, THROUGH OR UNDER COPELANDS FULLY AND IRREVOCABL Y RELEASES CITY, AND EACH OF ITS EMPLOYEES, OFFICERS, DIRECTORS , REPRESENTATIVES, AGENTS, SERVANTS, ATTORNEYS, AFFILIATES, PAREN T COMPANIES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS, AND ALL PERSONS , FIRMS, CORPORATIONS AND ORGANIZATIONS ACTING ON ITS BEHALF ("RELEASED CITY PARTIES"),FROM ANY AND ALL CLAIMS THAT IT MAY NO W HAVE OR HEREAFTER ACQUIRE AGAINST ANY OF THE RELEASED CITY PARTIE S FOR ANY AND ALL COSTS, LOSSES, LIABILITIES, DAMAGES, EXPENSES , DEMANDS, CLAIMS, ACTIONS OR CAUSES OF ACTION (COLLECTIVELY "CLAIMS") ARISING FROM OR RELATED TO THE CONDITION OF THE PALM DEVELOPMEN T SITE INCLUDING, WITHOUT LIMITATION, ANY PATENT OR LATEN T CONSTRUCTION DEFECTS OR INADEQUACIES IN THE CONDITION OF THE PROPERTY, INCLUDING COST OF REPAIR OR CORRECTION, ERRORS, OMISSIONS , OR OTHER CONDITIONS, LATENT OR OTHERWISE, GEOTECHNICAL AND SEISMIC , AFFECTING THE PROPERTY OR ANY PORTION THEREOF WHETHER OR NO T DISCOVERED PRIOR TO COPELANDS' INSPECTION OF THE PALM DEVELOPMEN T SITE, INCLUDING, WITHOUT LIMITATION : (A) ENVIRONMENTAL MATTERS WHICH WERE : (i) DESCRIBED OR REFERRED TO IN THE ENVIRONMENTAL REPORTS OR I N ANY ENVIRONMENTAL AUDIT OBTAINED BY COPELANDS OR ELSEWHERE IN THI S AGREEMENT, THE 861/863 PALM PARCEL AGREEMENT OR THE MONTERE Y PARCELS AGREEMENT ; O R Palm Dev Site OCC 120711 1000 1000 12/7/2011 6 B5-16 .53 ITACHMENT 4 (ii)DISCOVERABLE BY PRUDENT INVESTIGATION AT ANY TIME PRIOR TO TH E CLOSING ; O R (iii)OTHERWISE DISCLOSED BY CITY TO COPELANDS OR DISCOVERED B Y COPELANDS AT ANY TIME PRIOR TO THE CLOSING ; (B)THE ITEMS DESCRIBED IN SECTION 2 .06 ABOVE ; AND (C)ANY ERRORS, OMISSIONS OR DEFECTS COMMITTED OR CAUSED BY AN Y AGENT, EMPLOYEE, CONTRACTOR, OR OTHER PERSON PERFORMING WORK O R TAKING ACTION IN CONNECTION WITH THE PALM DEVELOPMENT SITE O N BEHALF OF CITY OR ITS PREDECESSORS ; NOTWITHSTANDING THE FOREGOING, SUCH RELEASE BY COPELANDS O F RELEASED CITY PARTIES SHALL NOT EXTEND TO ANY FRAUD BY CITY UPO N COPELANDS, WHICH IS EXPRESSLY RESERVED BY COPELANDS ON BEHALF O F ITSELF AND ANYONE CLAIMING BY, THROUGH OR UNDER COPELANDS . THIS RELEASE INCLUDES ANY AND ALL CLAIMS OF WHICH COPELANDS I S PRESENTLY UNAWARE OR WHICH COPELANDS DOES NOT PRESENTLY SUSPEC T TO EXIST WHICH, IF KNOWN BY COPELANDS, WOULD MATERIALLY AFFEC T COPELANDS' RELEASE TO CITY . COPELANDS SPECIFICALLY WAIVES TH E PROVISION OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES A S FOLLOWS : "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITO R DOES NOT KNOW OR EXPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME O F EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAV E MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." IT IS UNDERSTOOD AND AGREED THAT THE PURCHASE PRICE REFLECTS THA T ALL OF THE PALM DEVELOPMENT SITE IS SOLD BY CITY AND PURCHASED B Y COPELANDS SUBJECT TO THE FOREGOING . IT IS NOT CONTEMPLATED THAT TH E PURCHASE PRICE WILL BE INCREASED IF COSTS TO COPELANDS ASSOCIATE D WITH THE PALM DEVELOPMENT SITE PROVE TO BE LESS THAN EXPECTED NOR WILL THE PURCHASE PRICE BE REDUCED IF THE COPELANDS' PLAN TO DEVELO P THE PALM DEVELOPMENT SITE LEADS TO HIGHER COST PROJECTIONS . THI S PROVISION SHALL SURVIVE THE CLOSE OF ESCROW AND RECORDING OF TH E GRANT DEED . Copelands' Initials : City's Initials : Palm Dev Site OCC 120711 1000 100 0 12/7/2011 7 B5-16 .54 ATTACHMENT 4 ARTICLE III - TITLE TO PALM DEVELOPMENT SITE Section 3 .01 Condition of Title of Palm Development Site .Upon Closing, City shal l deliver the Palm Development Site to Copelands subject to no leases and occupancies . Title t o the Palm Development Site shall be conveyed by City to Copelands by a grant deed in form an d substance shown on Exhibit D hereto (the "Grant Deed"), and subject to the followin g "Conditions of Title": (a)A lien to secure payment of real estate taxes and supplemental taxes, i f any, not delinquent ; (b)Matters affecting the condition of title created by or with the writte n consent of Copelands, or approved by Copelands in writing ; (c) Printed exceptions and exclusions as specified on the Preliminary Titl e Report ; (d)Lease for 955 Morro ; an d (e)Any such other lot mergers, reciprocal access easements or any other land use management action that the City has entered into after the date of this Agreement an d which has become an encumbrance of record on the Palm Development Site, each o f which shall be allowed in the City's sole discretion during its ownership of the Pal m Development Site ; provided that no such encumbrance to title remaining at the time o f Closing may interfere with the Copelands' ability to develop the Project . Section 3 .02 Evidence of Title .Delivery of title to the Palm Development Site i n accordance with Section 3 .01 above shall be evidenced by the willingness of the Title Compan y to provide its written commitment to issue, upon Closing, recordation of the Grant Deed, an d payment of its regularly scheduled premium, an ALTA Standard Coverage Owner's Policy in th e appropriate amount showing title to the Palm Development Site vested in Copelands, o r Copelands' allowable assignee, subject to the Conditions of Title described in Section 3 .01 . Section 3 .03 Title Vesting.Title shall be vested in the Palm Development Site in the nam e of Copelands as provided above, or Copelands' allowable assignee . Copelands shall provid e written notice to the Parties and Escrow Company of any such allowable assignee not less tha n five (5) business days prior to the Closing . ARTICLE IV - CLOSING Section 4 .01 Closing .The sale and purchase transaction contemplated by this Agreemen t shall be consummated pursuant to the Escrow Instructions not later than June 30, 2020 (th e "Outside Closing Date") through an escrow established at the Escrow Company . Palm Dev Site OCC 120711 1000 100 0 12/7/2011 8 B5-16 .55 `CHMEN1'4 Section 4 .02 Conditions to Closing -- City .The City's obligation to transfer or cause the transfer of the Palm Development Site to the Copelands shall be subject to the fulfillment of th e conditions precedent (the "City Conditions") set forth below : (a) Related Agreements .Copelands (or its related companies) shall hav e executed and delivered to City the following agreements : (i) the 861/863 Palm Parce l Agreement ; (ii) Monterey Parcels Agreement ; (c) Lease for 955 Morro Street ; (iv ) Release and Waiver ; and (v) the Lease for Public Parking . (b) Closing under 861/863 Palm Parcel Agreement and Monterey Parcel s Agreement.The closing shall have occurred under the 861/863 Palm Parcel Agreemen t and the Monterey Parcels Agreement . (c) Construction on Palm Development Site .The Copelands shall hav e provided evidence reasonably satisfactory to the City that it is prepared to commenc e construction on the Palm Development Site in accordance with San Luis Obispo Cit y Council Resolution No . 10128 (2009 Series), adopted November 17, 2009, and i n conformity with the 2009 EIR (including without limitation the reuse of the Shangha i Low Restaurant sign), or as such entitlements subsequently may be modified an d approved by the City in the normal exercise of its development review authorit y following request therefor by Copelands (the "Project") as follows : (i)the Copelands have obtained permits for construction of the Projec t (the "Permits") and the Permits have not expired ; (ii)the Copelands shall have provided to the City document s evidencing the financial resources, from lenders and from equity funds an d investors as may be necessary, in a sufficient amount to complete the constructio n and equipping of the Project in accordance with a budget prepared by Copelands ; (iii)the Copelands have entered into construction contracts for th e Project evidencing that the work of construction can be completed within th e budget ; and (iv)the Copelands have submitted evidence to the City that a bindin g contract has been entered into, or is not appropriate, between Copelands and a n operator of the completed Project . (d) Construction on Monterey Parcels .Construction of the Monterey Improvements on the Monterey Real Property has been substantially completed withi n four (4) years of the Closing under the Monterey Parcels Agreement and Copeland s thereafter is diligently pursue completion thereof . Palm Dev Site OCC 120711 1000 100 0 12/7/2011 9 B5-16 .56 M CHMEN`i 4 (e)Satisfaction of Copelands' Conditions .Copelands shall have certified tha t all of the Copelands' Conditions have been satisfied and Copelands is obligated to buy th e Palm Development Site . (f)Performance by Copelands .Copelands shall have performed al l obligations to be performed by Copelands, and shall have made all deliveries required o f Copelands, pursuant to this Agreement prior to Closing . Section 4 .03 Conditions to Closing -- Copelands .The Copelands' obligation to purchas e the Palm Development Site from the City shall be subject to the fulfillment of the condition s precedent (the "Copelands' Conditions") set forth below : (a)Related Agreements .City shall have executed and delivered to Copeland s (or its related companies) the following agreements : (i) the 861/863 Palm Parce l Agreement ; (ii) Monterey Parcels Agreement ; (c) Lease for 955 Morro Street ; (iv) Release and Waiver ; and (v) the Lease for Public Parking . (b)Closing under 861/863 Palm Parcel Agreement and Monterey Parcel s Agreement .The closing shall have occurred under the 861/863 Palm Parcel Agreemen t and the Monterey Parcels Agreement . (c)Condition of Property ; Title .The Title Company shall have committed t o insure good title to the Palm Development Site as described in the Subdivision Map (a s defined in the Monterey Parcels Agreement) by issuing a title policy in the form describe d in Section 4 .03(d) below in the amount equal to the Purchase Price plus the Palm Parkin g Mitigation Payment, subject only to only to the Conditions of Title described in Sectio n 3 .01 . (d)Title Conditions .The Closing shall also be conditioned on th e commitment of the Title Company to issue, upon payment of its regularly schedule d premium, its owner's extended ALTA Form 1970(B) coverage policy of title insurance , with the endorsements described below, excluding all bankruptcy exceptions, showin g title to the Palm Development Site vested of record in the transferee subject (the "Titl e Policy"). The Title Policy shall contain endorsements required by Copelands . (e)Satisfaction of City Conditions .City shall have certified that all of th e City Conditions have been satisfied and City is obligated to sell the Palm Developmen t Site . (1) Performance by City.City shall have performed all obligations to b e performed by City, and shall have made all deliveries required of City, pursuant to thi s Agreement prior to Closing . Palm Dev Site OCC 120711 1000 100 0 12/7/2011 10 B5-16 .57 an d r CHMEN 4 Section 4 .04 Time for Closing .The Closing shall take place fifteen (15) days after th e conditions set forth in Sections 4 .02 and 4 .03 above have been satisfied, but no later than the Outside Closing Date . The date of the Closing may be extended by agreement of the parties . On the Closing Date, sole and exclusive possession of the Palm Development Site shall be delivere d to Copelands, or its allowable assignee, by City . Section 4 .05 Deposits by City .No later than one business day before the Closing Date , City shall deposit with Escrow Company : (a)The Grant Deed in the form attached hereto as Exhibit D duly executed by City , acknowledged and in recordable form , (b)If required by Escrow Company, City's FIRPTA Affidavit in a form reasonabl y acceptable to City, duly executed by City . (c)If required by Escrow Company, a California Form 593-C Real Estat e Withholding Exemption Certificate on Form 593-C, or equivalent, duly execute d by City ("Form 593-C"). (d)Such other bills of sale, assignments and other instruments of transfer o r conveyance as Copelands may reasonably request or as may be otherwise necessary to evidenc e and effect the sale, assignment, transfer, conveyance and delivery of the Palm Development Sit e to Copelands .Deposits by Copelands .No later than one business day before the Closing Date , Copelands shall deposit with Escrow Company :The monies required pursuant to Sections 2 .02, 2.0 3 and 6 .01 . b)Counterpart originals of the document listed in Sections 4 .05(a) above . c)Such other instruments or documents as may be necessary to effect the sale , assignment, transfer, conveyance and delivery of the Palm Development Site t o Copelands . Section 4 .07 Escrow Company's Actions .Upon the Closing Date, when Escro w Company holds the items required to be deposited by City and Copelands as described above , Escrow Company is prepared to issue and deliver to Copelands the Title Policy, and Escro w Company has received written authorization to close the escrow from Copelands and City , Escrow Company is hereby instructed and authorized to : Record the Grant Deed in the Office o f County Recorder of the County . b)Pay any transfer taxes . c)Instruct the County Recorder to return the Grant Deed to Copelands . Palm Dev Site OCC 120711 1000 100 0 12/7/2011 11 B5-16 .58 ACHMENT 4 d)Disburse to City from the funds deposited into Escrow by Copelands the Purchas e Price less City's share of prorations and other closing costs hereunder . e)Disburse from funds deposited by Copelands amounts toward payment of all othe r items chargeable to the account of Copelands hereunder, and disburse the balanc e of such funds, if any, to Copelands . 0 Deliver to Copelands the Non-foreign Affidavit, if any, the Form 593-C, if any , and the Title Policy . Section 4 .08 Early Termination .Either the City or the Copelands may terminate thi s Agreement by providing written notice thereof to the other party, and no Closing shall thereafte r occur hereunder, if: (a)Construction of the Monterey Improvements on the Monterey Rea l Property has not been substantially completed within four (4) years of the Closing unde r the Monterey Parcels Agreement ; o r (b)Copelands has not submitted construction plans for the Project by the dat e which is seven (7) years from the date this Agreement was executed and delivered by th e parties . Upon the termination of this Agreement as provided in this Section, Escrow shall b e cancelled, all instruments shall be returned to the parties who deposited the same, cash deposite d in Escrow, if any, shall be returned to the Copelands and the Copelands shall pay any title an d escrow cancellation charges . ARTICLE V - ADJUSTMENT AND PRORATION S At Closing, the following items shall be adjusted and prorated between Copelands an d City by the Escrow Company : Section 5 .01 Taxes .Taxes and assessments on the Palm Development Site for the perio d prior to the Closing shall not be prorated, as the Palm Development Site shall have been exemp t from property taxes prior to the Closing as a result of its ownership by City ; however, as of the Closing, the Palm Development Site shall be subject to real property taxes and assessments, al l of which shall be paid by Copelands outside of Escrow . Section 5 .02 Utilities and Contracts .All costs, if any, of utilities furnished to the Pal m Development Site shall be prorated as of the Closing Date . Palm Dev Site OCC 120711 1000 100 0 12/7/2011 12 B5-16.59 IACHMENT 4 ARTICLE VI - CLOSING COSTS ; NO BROKERS Section 6 .01 Copelands to Pay All Closing Costs .At Closing, Copelands shall pay al l of the costs of the Closing, including without limitation all fees and costs for releasing al l encumbrances, liens and security interests of record which are not allowable Conditions to Title , all of City's outside counsel fees for the transactions contemplated hereunder and not paid prio r to Closing pursuant to Section 11 .06, all applicable sales, use, documentary or other transfe r taxes arising out of the sale of the Palm Development Site, the premium for the Title Policy fo r the Palm Development Site and any endorsements requested by Copelands and all fees to th e Escrow Company . Section 6 .02 No Brokerage Commissions .Each of City and Copelands represents and warrants to the other that it has not dealt with or been represented by any brokers or finders i n connection with the purchase and sale of the Palm Development Site . Each Party shall indemnif y and hold the other free and harmless from and against all costs and liabilities including, withou t limitation, attorneys' fees and the costs and expenses of litigation, for causes of action o r proceedings which may be instituted by any other broker, agent or finder, licensed or otherwise , claiming through, under or by reason of the conduct of the indemnifying Party in connection wit h this transaction . Section 6 .03 Other Closing Costs .Any and all other closing costs related to th e transaction shall be paid by the Parties in the manner consistent with customary practice in Sa n Luis Obispo County .Post-Closing Prorations .Should any real estate taxes, bonds, assessments , utilities, other expenses of the Palm Development Site or liens relating to periods before th e Closing Date be omitted from such prorations for any reason, including without limitation lat e assessment or Title Company error, then after the Closing, City shall remain solely responsibl e for, and shall promptly pay before delinquency, any such real estate taxes, bonds, assessments , utilities, other expenses of the Property or liens relating to periods before the Closing Date . Thi s obligation shall survive the Closing .POST CLOSING OBLIGATION S Section 7 .01 Limitations and Restrictions on the Use of Palm Development Site ; Reverter. After the Closing, Copelands agree to promptly commence construction on the Project and t o diligently pursue such construction to completion thereafter . The parties agree, and the Gran t Deed for the Palm Development Site shall reflect, that until substantial completion of the Projec t in accordance with the Permits : (i) the use of the Palm Development Site shall be limited an d restricted to the construction of the Project in accordance with the Permits ; (ii) the Copeland s shall not encumber the Palm Development Site except as security for construction loans t o finance the construction of the Project ; and (iii) the City has the right of reverter and a power o f termination (Civil Code section 885 .010) to cause the title of the Copelands to the Pal m Development Site to terminate and to revert to the City (a) if the construction of the Project i n accordance with the Permits does not commence within six (6) months of permit issuance, or (b ) if construction is commenced but is not diligently pursued by Copelands to completion withi n Palm Dev Site OCC 120711 1000 100 0 12/7/2011 13 B5-16 .60 ATTACHMENT 4 twenty-four (24) months of the Closing Date, or within such additional period of time to whic h the City may consent in writing upon demonstration by Copelands of diligence and good cause , such consent not to be unreasonably withheld . Upon the timely substantial completion of th e Project in accordance with the Permits, the City shall execute and deliver to the Copelands,a Certificate of Completion in substantially the form attached hereto as Exhibit F, which shal l acknowledge that the deed restriction and any right of reverter in favor of the City have terminated . In the event the City, being entitled to do so, causes the title to the Pal m Development Site to revert to the City, then the City shall pay to the Copelands (a) an amoun t equal to the Purchase Price as set forth in Section 2 .02 above and (b) only if the parking on th e Palm Development Site shall not have been removed as of the time the City exercises its right o f reverter, an additional amount equal to the amount paid by Copelands for the Palm Parkin g Mitigation Payment . If, at the time of City's exercise of its reverter, Copelands has removed an y or all of the existing parking on the Palm Development Site, City shall be entitled to retain th e Palm Parking Mitigation Payment paid to it by Copelands . In the event the City, being entitled t o do so, causes the title to the Palm Development Site to revert to the City, the City shall b e entitled permanently to retain title to the 861/863 Palm Parcel and shall have no obligation t o offer, return, or sell title to the 861/863 Palm Parcel to Copelands . Section 7 .02 Survival of Obligations Post-Closing .Without limitation, the obligations of Copelands set forth in this Article VII shall survive the Closing of the Escrow and th e recordation of the Grant Deed . ARTICLE VIII - INDEMNIFICATION S Section 8 .01 Indemnification by City .As of the Closing Date, City shall indemnify, defen d and hold Copelands harmless of, against and from any and all liabilities, claims, demands an d expenses, of any kind or nature (except those items which by this Agreement specifically becom e the obligation of Copelands) accruing on or before the Closing Date, including any claim fo r labor, materials or supplies in connection with work performed on the Palm Development Site , and which are in any way related to the ownership or operation of the Palm Development Site . Section 8 .02 Indemnification by Copelands .As of the Closing Date, Copelands shal l indemnify, defend and hold City harmless of and from any and all liabilities, claims, demand s and expenses of any kind or nature (except those items which by this Agreement specificall y remain the obligation of City) accruing after the Closing Date, including any claim for labor , materials or supplies in connection with work performed on the Palm Development, and al l expenses related thereto including, without limitation, court costs and attorneys' fees . Without limitation, from and after the date of execution of this Agreement, Copelands shall als o indemnify and defend City, using counsel approved by City in its absolute discretion, from an y and all third party challenges to this Agreement or any of the transactions contemplate d hereunder or any challenge to any entitlement, approval or environmental impact report ("EIR") Palm Dev Site OCC 120711 1000 1000 12/7/2011 14 B5-16 .61 h- MENT 4 proposed, drafted, or certified in connection with any of the foregoing transactions, including an y supplement or addendum thereto . ARTICLE IX - REMEDIE S Section 9 .01 Right to Cure .Should either Party default under any of its obligations hereunder other than its obligation to close by the Outside Closing Date, the other Party shal l provide notice of such default to the defaulting Party, who will be allowed to cure any suc h default for a period of five (5) business days after notice is given the defaulting Party . No grac e or cure period is allowed for the failure of either Party to cause the Closing to occur prior to or o n the Outside Closing Date . Section 9 .02 Termination .Should the Closing not occur on or before the Outside Closin g Date for any reason other than the default of City under this Agreement, then this Agreemen t shall be terminated, and City shall be entitled to keep any option or deposit or other payments , and Copelands acknowledges and agrees it shall have no rights either to any option or deposit o r other payments or to bring any action seeking specific performance of this Agreement, damage s for its breach, or refund of any option or deposit or other payments . In addition, upo n termination of this Agreement, the City shall be entitled permanently to retain title to the Pal m Development Site (including without limitation the 861/863 Palm Parcel) and shall have n o obligation to offer, return, or sell title to said real property to Copelands . Copelands and City agree that in the event the Closing fails to occur because of Copelands ' default, breach or failure to perform hereunder and not due to City's wrongful acts, omissions o r breach, the damages to City would be extremely difficult and impracticable to ascertain, and tha t therefore, the right of City to permanently retain any option, deposit and other payments as wel l as title to the Palm Development Site (including without limitation the 861/863 Palm Parcel) is a reasonable estimate of the damages to City . Accordingly, Copelands agrees that upo n (1) Copelands' receipt of notice of such default or breach from City, (2) failure by Copelands t o cure said breach, default or failure to perform within 3 days after receipt of such notice, an d (3) failure to close escrow occurs because of such breach, default or failure to perform, then Cit y shall retain any option, deposit or other payments (and all interest earned thereon) previousl y delivered to City and title to the Palm Development Site, as liquidated damages, as City's sol e remedy in the event of any such material breach or default by Copelands hereunder . Initials of Copelands : Initials of City : Section 9 .03 Remedies upon Termination .In the event of any termination of thi s Agreement not caused by the default of either of the Parties hereto which is not cured within an y applicable cure period, this Agreement shall be of no further force or effect, and neither of th e Parties shall have any recourse against the other nor any right to file a lis pendens or to bring a n action for specific performance hereunder . Should either Party default under its obligation s Palm Dev Site OCC 120711 1000 100 0 12/7/2011 15 B5-16 .62 pursuant to this Agreement, and should such default result in the Closing failing to occur prior t o the Outside Closing Date, then the non-defaulting Party shall have the right to bring an actio n against the defaulting Party seeking specific performance of this Agreement . Section 9 .04 Post-Closing Remedies ; Right of Reverter .In the event that Copeland s defaults in performing any of its post-closing obligations under this Agreement, and fails to cur e any such default within the cure period provided pursuant to Section 9 .01, then City shall hav e the right to seek specific performance as well as any other rights or remedies to which City ma y be entitled under applicable law . In addition to, and not in lieu of the foregoing, shoul d Copelands fail to complete any of its post-closing obligations stated in Article VII timely, suc h failure shall constitute a default by Copelands hereunder, and City shall have the right to exercis e its right of reverter and to cause title to the Palm Development Site to revert to City by filing a document indicating its election to exercise its right of reverter with the County Recorder's Office for the County of San Luis Obispo, California and by paying to Copelands the amount s indicated in Section 7 .01 . Copelands hereby agrees that in such event, it shall have no right t o challenge or take any action whatsoever to prevent City from exercising its right to reverter, no r to attempt to have such reverter overturned, nor to bring any action against City or any of it s employees or agents seeking damages or any other relief as a result of City's action to enforce it s reversionary rights . ARTICLE X - COPELANDS' REPRESENTATIONS AND WARRANTIE S Section 10 .01 Representations and Warranties of Copelands .Copelands makes the following representations and warranties to City : a)Copelands is a California limited liability company duly organized and validly existin g under the laws of the State of California, and is qualified to do business in the State o f California. b)Copelands has the right, power and authority to enter into this Agreement and to perfor m its obligations hereunder, and the person(s) executing this Agreement on behalf o f Copelands have the right, power and authority to do so . c)This Agreement constitutes the legal, valid and binding obligation of Copeland s enforceable against Copelands in accordance with its terms, except to the extent that suc h enforcement may be limited by applicable bankruptcy, insolvency, moratorium and othe r principles relating to or limiting the rights of contracting parties generally . Neither thi s Agreement nor the consummation of any of the transactions contemplated hereby violate s or shall violate any provision of any agreement or document to which Copelands is a party or to which Copelands is bound . No consent from any third party is required before the Palm Development Site may be purchased by Copelands . d)Copelands is not bankrupt or insolvent under any applicable Federal or state standard . Palm Dev Site OCC 120711 1000 100 0 12/7/2011 16 B5-16 .63 ATTACHMENT 4 Copelands has not filed for protection or relief under any applicable bankruptcy o r creditor protection statute . Copelands has not been threatened by creditors with a n involuntary application of any applicable bankruptcy or creditor protection statute . Copelands is not entering into the transactions described in this Agreement with an inten t to defraud any creditor or to prefer the rights of one creditor over any other . City an d Copelands have negotiated this Agreement at arms-length and the consideration to b e paid represents fair value for the assets to be transferred . All representations and warranties of Copelands in this Agreement are made as of the date of thi s Agreement and as of the Closing, and shall survive the Closing and the recordation of the Gran t Deed . It shall be a material default if Copelands is unable to make such representations an d warranties truthfully as of the Closing Date . ARTICLE XI - MISCELLANEOU S Section 11 .01 Notices .All notices, demands or other communications of any typ e (collectively "Notices") given by City to Copelands or by Copelands to City, whether required b y this Agreement or in any way related to this transaction, shall be sufficient if in writing an d delivered by hand or Federal Express or similar courier service to the person to whom the Notic e is directed or mailed by United States Mail, as a Registered or Certified item, Return Receip t Requested, at or to the addresses specified in this section . Notices delivered by mail shall b e deposited in a Post Office or other depository under the care or custody of the United State s Postal Service, enclosed in a wrapper with proper postage affixed, addressed as follows : City : City of San Luis Obisp o 990 Palm Street San Luis Obispo, California 9340 1 Attention : City Manager With copies to : City Attorne y 990 Palm Street San Luis Obispo, California 9340 1 Copelands : With Copies to : Palm Dev Site OCC 120711 1000 1000 12/7/2011 Thomas M . Copeland, Manager SLO Chinatown, LL C Post Office Box 1226 0 San Luis Obispo, California 9340 6 Suzanne Frye r Copelands' Propertie s 1026 Chorro Street, Suite 20 0 Post Office Box 1226 0 17 B5-16 .64 ATTACHMENT 4 San Luis Obispo, California 9340 6 Section 11 .02 Governing Law; Plurality ; and Gender .This Agreement shall be construe d and interpreted in accordance with the laws of the State of California . Where required for prope r interpretation, words in the singular shall include the plural ; the masculine gender shall includ e the neuter and the feminine, and vice versa . Section 11 .03 Amendment .This Agreement may not be modified or amended, except by a n agreement in writing signed by the parties to this Agreement . The parties may waive any of th e conditions contained in this Agreement or any of the obligations of the other party under thi s Agreement, but any such waiver shall be effective only if in writing and signed by the part y waiving such conditions or obligations . Section 11 .04 Authorization .The person executing this Agreement on behalf of Copeland s hereby warrants and represents to City that all necessary legal prerequisites to that party's execution of this Agreement have been satisfied and that he or she is fully authorized to do s o and to bind the party of whose behalf he or she signs . The person executing this Agreement on behalf of City claims to do so to the extent the authority to do so has been duly delegated to tha t person by the City Council of the City in accordance with applicable law . Section 11 .05 Time of Essence .Time is of the essence in this Agreement . Section 11 .06 Attorneys' Fees for Transaction and for Disputes .Copelands shall pay all o f the City's outside counsel's fees and costs incurred in connection with the documentation an d negotiation of this Agreement as of the date of the execution of this Agreement upon the City's execution and delivery of this Agreement to Copelands, and all of City's other outside counse l fees at Closing . If it becomes necessary for either party to file a suit to enforce this Agreement o r any provisions contained in this Agreement, or to seek damages for a breach, the prevailing part y shall be entitled to recover, in addition to all other remedies or damages, reasonable attorneys ' fees incurred in such suit . Section 11 .07 Consent to Jurisdiction .City and Copelands agree that any suit, action o r other legal proceeding arising out of or in connection with this Agreement may be brought, an d shall be brought only, in a superior or municipal court of the County of San Luis Obispo, State o f California and hereby consent to the jurisdiction of any such court in any such suit, action o r proceedings . City and Copelands hereby waive any objection which such party may have to th e laying of any such suit, action or proceeding in any such court . Section 11 .08 Captions .The description headings of the several Articles, Sections an d Paragraphs contained in this Agreement are inserted for convenience only and shall not control o r affect the meaning or construction of any of the provisions of this Agreement . Palm Dev Site OCC 120711 1000 100 0 12/7/2011 18 B5-16 .65 i MCHMENT 4 Section 11 .09 Entire Agreement.Except for the agreements also described in thi s Agreement, this Agreement, including the Exhibits attached to this Agreement, constitutes th e entire agreement among the parties pertaining to the subject matter of this Agreement an d supersedes all prior and contemporaneous agreements and understandings of the parties i n connection therewith, including but not limited to that certain Option to Purchase Real Property , dated as of November 5, 2003, Modification to Option to Purchase Real Property, dated as o f April 3, 2008, Second Modification to Option to Purchase Real Property, dated as of July 1, 200 8 and Third Modification to Option to Purchase Real Property, dated as of July 1, 2011 . N o representation, warranty, covenant, agreement or condition not expressed in this Agreement shal l be binding upon the parties to this Agreement or shall affect or be effective to interpret, chang e or restrict the provisions of this Agreement . Section 11 .10 Counterparts .A counterpart of this Agreement with separate but full y executed signature pages attached thereto shall have the full force and effect of an origina l executed instrument . Section 11 .11 Successors and Assigns .This Agreement shall not be assignable by eithe r party, and nothing contained herein shall inure to the benefit of other parties . Until completion o f construction of the Project, the Copelands shall not make or create any sale, assignment , hypothecation or other transfer of ownership with respect to this Agreement or the Pal m Development Site or the control of its uses, either voluntarily or by operation of law, without th e prior approval of the City, which may be granted or denied in the City's sole discretion . Any such transfer made in contravention of this Agreement shall be void . Notwithstanding the foregoing , the following transfers shall be permitted : (a)After the Closing, a hypothecation creating a security interest encumberin g the fee interest in the Palm Development Site a construction loan to complete the Project ; (b)Any transfer directly resulting from the foreclosure of a security interest or the granting of a deed in lieu of foreclosure of a security interest permitted under th e preceding paragraph ; and (c)Any transfer to an entity which is 100% owned by the Copelands, or if no t 100% owned, the majority of the beneficial interests in such entity is owned by th e Copelands and the entity is controlled by the Copelands, and the Copelands deliver to th e City satisfactory evidence of such ownership and control . Section 11 .12 Tax Reporting .Escrow Company is designated the "real estate reportin g person" for purposes of Section 6045 of the Internal Revenue Code of 1986, as amended, an d Treasury Regulations Section 1 .6045 4, and any instructions or settlement statement prepared b y Escrow Company shall so provide . Escrow Company shall be responsible for filing Form 1099 S with the Internal Revenue Service . Palm Dev Site OCC 120711 1000 100 0 12/7/2011 19 B5-16 .66 , i M ENT 4 Section 11 .13 Force Majeure .Neither Party shall be liable for any failure or delay in it s performance under this Agreement (other than for delay in the payment of money due an d payable hereunder) if and to the extent said failures or delays are caused by causes beyond tha t Party's control that occur without its fault or negligence, including without limitation, fire , explosion, flood, severe weather, accident, strike, governmental act, embargo, shortages of labor , materials or fuel, failure by, or inability of , contractors or other third parties to perform , computer system failure, war or military action, riot, or civil disturbance ; provided that, as a condition to its claim of nonliability, the Party experiencing the difficulty shall give the othe r Party written notice of any such failure or delay promptly and in any event not later than five (5 ) business days after such failure or delay begins, and such notice shall describe in detail the reaso n for such failure or delay . Further, such Party experiencing the difficulty shall use al l commercially reasonable efforts to correct the failure or delay as quickly as possible under th e circumstances . Dates by which performance obligations are scheduled to be met will b e extended for a period of time equal to the time lost due to any delay so caused . ARTICLE XII - EXHIBIT S All Exhibits shall be approved by each party, which approval shall be evidenced by suc h party's initials on each Exhibit hereto . Exhibit A Legal Description of 861/863 Palm Parcel s Exhibit B Legal Description of Palm Real Propert y Exhibit C-1 Preliminary Title Report for 861/863 Pal m Exhibit C-2 Preliminary Title Report for Palm Real Propert y Exhibit D Form of Grant Dee d Exhibit E 955 Morrow Leas e Exhibit F Form of Certificate of Completio n Palm Dev Site OCC 120711 1000 100 0 12/7/2011 20 B5-16 .67 Ai i CHMENT 4 This Agreement is executed by the parties as of the date first written above . SLO CHINATOWN, LLC , a California limited liability compan y By : Thomas M . Copeland Its : Manager CITY OF SAN LUIS OBISPO , a municipal corporation and Charter Cit y By : Mayo r Attest : By : City Clerk Approved as to Form : By : City Attorne y Palm Dev Site OCC 120711 1000 100 0 12/7/2011 21 B5-16 .68 L'HMENT 4 TABLE OF CONTENT S ARTICLE I - DEFINITIONS 1 Section 1 .01 861/863 Palm Building 1 Section 1 .02 861/863 Palm Parcel 1 Section 1 .03 861/863 Palm Parcel Agreement 1 Section 1 .04 Closing 1 Section 1 .05 Closing Date 1 Section 1 .06 Closing Payment 1 Section 1 .07 Escrow 2 Section 1 .08 Escrow Company 2 Section 1 .09 Escrow Instructions 2 Section 1 .10 Monterey Improvements 2 Section 1 .11 Monterey Parcels Agreement 2 Section 1 .12 Monterey Real Property 2 Section 1 .13 Palm Development Site 2 Section 1 .14 Palm Real Property 3 Section 1 .15 Preliminary Title Report 3 Section 1 .16 Purchase Price 3 Section 1 .17 Real Property 3 Section 1 .18 Title Company 3 ARTICLE II - PURCHASE AND SALE 3 Section 2 .01 Purchase and Sale 3 Section 2 .02 Purchase Price 3 Section 2 .03 Payment for Mitigation of Public Parking Removal 3 Section 2 .04 Payment 4 Section 2 .05 No Restrictions on City's Use of Property Prior to Closing 4 Section 2 .06 Due Diligence ; Condition of Property 5 Section 2 .07 Release 6 ARTICLE III - TITLE TO PALM DEVELOPMENT SITE 8 Section 3 .01 Condition of Title of Palm Development Site 8 Section 3 .02 Evidence of Title 8 Section 3 .03 Title Vesting 8 ARTICLE IV - CLOSING 8 Section 4 .01 Closing 8 Section 4 .02 Conditions to Closing -- City 9 Section 4 .03 Conditions to Closing -- Copelands 1 0 Section 4 .04 Time for Closing 1 1 Section 4 .05 Deposits by City 1 1 Section 4 .06 Deposits by Copelands 1 1 Section 4 .07 Escrow Company's Actions 1 1 Section 4 .08 Early Termination ARTICLE V - ADJUSTMENT AND PRORATIONS 1 2 Section 5 .01 Taxes 1 2 Section 5 .02 Utilities and Contracts 1 2 ARTICLE VI - CLOSING COSTS ; NO BROKERS 1 3 Palm Dev Site OCC 120711 1000 100 0 12/7/2011 22 B5-16 .69 .1ACHMENT -. Section 6 .01 Copelands to Pay All Closing Costs 1 3 Section 6 .02 No Brokerage Commissions 1 3 Section 6 .03 Other Closing Costs Section 6 .04 Post-Closing Prorations 1 3 ARTICLE VII - POST CLOSING OBLIGATIONS 1 3 Section 7 .01 Limitations and Restrictions on the Use of Palm Development Site ; Reverter 1 3 Section 7 .02 Survival of Obligations Post-Closing 1 4 ARTICLE VIII - INDEMNIFICATIONS 1 4 Section 8 .01 Indemnification by City 1 4 Section 8 .02 Indemnification by Copelands 1 4 ARTICLE IX - REMEDIES 1 5 Section 9 .01 Right to Cure 1 5 Section 9 .02 Termination 1 5 Section 9 .03 Remedies upon Termination 1 5 Section 9 .04 Post-Closing Remedies ; Right of Reverter 1 6 ARTICLE X - COPELANDS' REPRESENTATIONS AND WARRANTIES 1 6 Section 10 .01 Representations and Warranties of Copelands 1 6 ARTICLE XI - MISCELLANEOUS 1 7 Section 11 .01 Notices 1 7 Section 11 .02 Governing Law ; Plurality ; and Gender 1 8 Section 11 .03 Amendment 1 8 Section 11 .04 Authorization 1 8 Section 11 .05 Time of Essence 1 8 Section 11 .06 Attorneys' Fees for Transaction and for Disputes 1 8 Section 11 .07 Consent to Jurisdiction 1 8 Section 11 .08 Captions 1 8 Section 11 .09 Entire Agreement 1 9 Section 11 .10 Counterparts 1 9 Section 11 .11 Successors and Assigns Section 11 .12 Tax Reporting 1 9 Section 11 .13 Force Majeure 2 0 ARTICLE XII - EXHIBITS 2 0 Palm Dev Site OCC 120711 1000 100 0 12/7/2011 23 B5-16 .70 iviENT 4 STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE - NE T 1 .Basic Provisions ("Basic Provisions"). 1 .1 Parties :This Lease ("Lease"),dated for reference purposes only December 13, 2011 is made by and between ,SLO CHINATOWN, LLC, a California limited liability company ("Lessor") and CITY OF SAN LUIS OBISPO, a municipal corporatio nand charter city ("Lessee"),(collectively the "Parties",or individually a "Party"). 1 .2 Premises :That certain real property, including all improvements therein or to be provided by Lessor under th eterms of this Lease, and commonly known as (1) a portion of San Luis Obispo City Parking Lot #3, which is located on the propert yto be acquired by Lessor pursuant to that certain Agreement of Purchase and Sale – Monterey Parcels, to be executed an d delivered between Lessor and Lessee (the "Monterey Agreement"), which is adjacent to Monterey Street and is between 87 0 Monterey Street and 886 Monterey Street, and (2) a portion of San Luis Obispo City Parking Lot #11, which is located on th e property to be acquired by Lessor pursuant to the Monterey Agreement which is adjacent to Monterey Street and is between 84 8Monterey Street and 868 Monterey Street, as generally shown on Exhibit A attached hereto located in the County of San Lui sObispo, State of California . 1 .3 Term : Month to month, which may be terminated by Lessor on not less than thirty (30) days prior written notic e(the "Termination Notice") as set forth in Paragraph 3 .2 below ("Original Term") commencing on the Closing Date, as that term i sdefined in the Monterey Agreement ("Commencement Date") and ending on the effective date of the Termination Notic e("Expiration Date"). (See also Paragraph 3 ) 1 .4 Early Possession : N/A ("Early Possession Date")(See also Paragraphs 3 .2 and 3 .3) 1 .5 Base Rent : $1 .00 per month ("Base Rent"), payable on the First of each month commencing on th eCommencement Date . (See also Paragraph 4 ) q If this box is checked, there are provisions in this Lease to be adjusted . 1 .6 Base Rent and Other Monies Paid Upon Execution : (a)Base Rent : $ -0-, for the period (b)Security Deposit : $-0-("Security Deposit").(See also Paragraph 5 ) (c)Association Fees : $-0-, for the period _, (d)Other: $-0-, fo r (e)Total Due Upon Execution of this Lease: $-0-. 1 .7 Agreed use: Parking lot available for public parking (See also Paragraph 6 ) 1 .8 Insuring Party.Lessee is the "Insuring Party"unless otherwise stated herein . (See also Paragraph 8 ) 1 .9 Real Estate Brokers :(See also Paragraph 15 ) (a)Representation :The following real estate brokers (the "Brokers")and brokerage relationships exist i nthis transaction (check applicable boxes): (b)Payment to Brokers :Upon execution and delivery of this Lease by both Parties, Lessor shall pay to th e Brokers the Brokerage fee agreed to in a separate written agreement (or if there is no such agreement, th esum of -0-_or,-0-_% of the total Base Rent) for the brokerage services rendered by the Brokers . 1 .10 Guarantor .The obligations of the Lessee under this Lease are to be guaranteed by, N/A ("Guarantor").(See also Paragraph 37 ) 1 .11 Attachments. Attached hereto are the following, all of which constitute a part of this Lease : q an Addendum consisting of Paragraphs _ through _; qO a plot plan depicting the Premises, which is attached as Exhibit A hereto ; q a current set of the Rules and Regulations ; q a Work Letter; q other (specify): 2 .Premises . 2 .1 Letting . Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, a t the rental, and upon all of the terms, covenants and conditions set forth in this Lease . Unless otherwise provided herein, an y statement of size set forth in this Lease, or that may have been used in calculating Rent, is an approximation which the Partie s agree is reasonable and any payments based thereon are not subject to revision whether or not the actual size is more or less .Note : Lessee is advised to verify the actual size prior to executing this Lease . 2 .2 Condition. Lessor shall deliver the Premises to Lessee AS IS, WHERE IS, with no warranty of any natur ewhatsoever on the Commencement Date ("Start Date"). q , None q , None q, None , represents Lessor exclusively ("Lessor's Broker"); represents Lessee exclusively ("Lessee's Broker"); o r represents both Lessor and Lessee ("Dual Agency"). B5-16 .71 ATTACHMENT 4 2 .3 Compliance.Lessor makes no warranty with respect to whether improvements on the Premises comply wit h the building codes, applicable laws, covenants or restrictions of record, regulations, and ordinances ("Applicable Requirements") that were in effect at the time that each improvement, or portion thereof, was constructed . Lessee is responsible for determinin g whether or not the Applicable Requirements, and especially the zoning, are appropriate for Lessee's intended Use and acknowledg e that past uses of the Premises may not longer be allowed . If the Premises do not comply with the Applicable Requirements an d Lessee gives Lessor written notice of non compliance, then Lessee shall correct such non compliance at Lessee's sole cost an d expense as soon as reasonably possible thereafter, and shall provide Lessor with satisfactory assurance of such correction within a reasonable time under the circumstances . If the Applicable Requirements are hereafter changed so as to require during the term of this Lease the construction of a n addition to or an alteration of the Premises, the remediation of any Hazardous Substance, or the reinforcement or other physica l modification of the Premises ( "Capital Expenditure" ),Lessee shall be fully responsible for the cost thereof or Lessee ma y instead terminate this Lease . If Lessee elects termination, Lessee shell immediately cease the use of the Premises which requir e such capital expenditure and deliver to Lessor written notice specifying a termination date at least 60 days thereafter . Such termination date may, however, be the last day that Lessee could legally utilize the Premises without commencing such capita l expenditure if such date is earlier than 60 days from the date of such termination notice . 2 .4 Acknowledgements .Lessee acknowledges that it is currently in possession of the Premises and that : (a) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the condition of the Premises (including but not limited t o the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements an d the Americans with Disabilities Act), and their suitability for Lessee's intended use, (b) Lessee has made such investigation as i t deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of th e Premises, and (c) neither Lessor, Lessor's agents, nor Brokers have made any oral or written representations or warranties wit h respect to said matters other than as set forth in this Lease . In addition, Lessor acknowledges that : (i) Brokers have made n o representations, promises or warranties concerning Lessee's ability to honor the Lease or suitability to occupy the Premises, and (ii ) it is Lessor's sole responsibility to investigate the financial capability and/or suitability of all proposed tenants . 2 .5 Lessee as Prior Owner/Occupant.The warranties made by Lessor in Paragraph 2 shall be of no force o r effect if immediately prior to the Start Date Lessee was the owner or occupant of the Premises . In such event, Lessee shall b e responsible for any necessary corrective work . 3.Term . 3 .1 Term . The Commencement Date, Expiration Date and Original Term of this Lease are as specified i n Paragraph 1 .3 . 3 .2 Termination .The Parties acknowledge that Lessor intends to develop the Premises . Only after the parking lo t and exits therefrom onto Palm Street have been reconfigured as described in (a) that certain Agreement of Purchase and Sale — Monterey Parcels, to be executed and delivered between the City and SLO Chinatown, LLC, a California limited liability company , and (b) that certain Agreement of Purchase and Sale — 861/863 Palm Parcels, to be executed and delivered between the City an d CP Monterey Morro, LLC (these agreements are referred to herein collectively as the "PSA Agreements"), Lessor shall have th e right to terminate this Lease on not less than 30 days prior written notice to Lessor, which notice may not be given by Lessor until a construction permit for the Premises has been issued to Lessor . Nothing in this Paragraph, however, shall prevent Lessor fro m exercising its rights to early termination of this Lease in the event of a breach by Lessee as provided in Paragraph 13 .2 . 3 .3 [INTENTIONALLY OMITTED .] 3 .4 Lessee Compliance .Lessor shall not be required to deliver possession of the Premises to Lessee until Lesse e complies with its obligation to provide evidence of insurance (Paragraph 8 .5). Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent , notwithstanding Lessor's election to withhold possession pending receipt of such evidence of insurance . Further, if Lessee i s required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect t o withhold possession until such conditions are satisfied . 4.Rent . 4 .1 .Rent Defined . All monetary obligations of Lessee to Lessor under the terms of this Lease (except for th e Security Deposit) are deemed to be rent ("Rent"). 4 .2 Payment . Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States , without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due . All monetary amounts shall be rounded to the nearest whole dollar . In the event that any invoice prepared by Lessor is inaccurate suc h inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay the amount set forth in this Lease . Rent for any perio d during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of sai d month . Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may fro m time to time designate in writing . Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor's rights to the balance of such Rent, regardless of Lessor's endorsement of any check so stating . In the event that any check, draft, o r other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum o f $25 in addition to any Late Charge and Lessor, at its option, may require all future Rent be paid by cashier's check . Payments wil l be applied first to accrued late charges and attorney's fees, second to accrued interest, then to Base Rent and Common Area Operating Expenses, and any remaining amount to any other outstanding charges or costs . 4 .3 [intentionally omitted ] 5.Security Deposit.[INTENTIONALLY OMITTED .] 6 .Use . PAGE 2 r 35-16 .7 2 INITIALS INITIALS ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05E ATTACHMENT 4 6 .1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which i s reasonably comparable thereto, and for no other purpose . Lessee shall not use or permit the use of the Premises in a manner that i s unlawful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises o r properties . Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds , fish, or reptiles . Lessor shall not unreasonably withhold or delay its consent to any written request for a modification of the Agree d Use, so long as the same will not impair the structural integrity of the improvements on the Premises or the mechanical or electrica l systems therein, and/or is not significantly more burdensome to the Premises . If Lessor elects to withhold consent, Lessor shal l within 7 days after such request give written notification of same, which notice shall include an explanation of Lessor's objections t o the change in the Agreed Use . 6 .2 Hazardous Substances . (a)Reportable Uses Require Consent .The term "Hazardous Substance"as used in this Lease shall mean an y product, substance or waste whose presence, use or manufacture, disposal, transportation or release, either by itself or i n combination with other materials expected to be on the Premises, is either : (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory . Hazardou s Substances shall include, but not be limited to hydrocarbons, petroleum, gasoline and/or crude oil or any products, by products o r fractions thereof . Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardou s Substance, without the express written consent of Lessor and timely compliance (at Lessee's expense) with all Applicabl e Requirements . "Reportable Use"shall mean (i) the installation or, use of any above or below ground storage tank, (ii) th e generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or wit h respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (iii) th e presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice b e given to persons entering or occupying the Premises or neighboring properties . Notwithstanding the foregoing, Lessee may us e any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc .) and common household cleaning materials, so long as such use is in compliance wit h Applicable requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful ris k of contamination or damage or expose Lessor to any liability therefor . If addition, Lessor may condition the consent to an y reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself, the public th e Premises and/or the environment against damage, contamination injury and or liability, including but not limited to, the installatio n (and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and/o r increasing the Security Deposit . (b)Duty to Inform Lessor . If Lessee knows, or has reasonable cause to believe, that a Hazardous Substanc e has come to be located in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shal l immediately give written notice of such fact to Lessor, and provide Lessor with a copy of any report, notice, claim or othe r documentation which it has concerning the presence of such Hazardous Substance . (c)Lessee Remediation .Lessee shall not cause or knowingly permit any Hazardous Substance to be spilled o r released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, a t Lessee's expense, comply with all Applicable Requirements and take all investigatory and/or remedial action reasonabl y recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance , security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, o r pertaining to or involving any Hazardous Substance in or on the Premises during the term of this Lease, by or for Lessee . (d)Lessee Indemnification .Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders an d ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgment, claims, expenses , penalties, and attorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises by o r for Lessee (provided however, that Lessee shall have no liability under the Lease with respect to underground migration of an y Hazardous Substances under the Premises from adjacent properties not caused or contributed by Lessee . Lessee's obligation s shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created o r knowingly permitted by Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall surviv e the expiration or termination of this Lease .No termination, cancellation or release agreement entered into by Lessor an d Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unles s specifically so agreed by Lessor in writing at the time of such agreement . (e)[intentionally omitted ] (f)[intentionally omitted] (g)Lessor Termination Option .If a Hazardous Substance Condition (see paragraph 9 .1(e)) occurs during th e term of this Lease, unless Lessee is legally responsible therefore (in which case Lessee shall make the investigation an d remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject t o Lessor's rights and Paragraph 6 .2(d) and Paragraph 13), Lessor may, at Lessor's option, either(i) investigate and remediate suc h Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor's expense, in which event this Lease shal l continue in full force and effect, or (ii) only after the parking lot and exits therefrom onto Palm Street have been reconfigured a s described in the PSA Agreements, give written notice to Lessee within 30 days after receipt by Lessor of knowledge of th e occurrence of such Hazardous Substance Condition, of Lessor's desire to terminate this Lease as of the date 60 days following th e date of such notice . In the event Lessor elects to give a termination notice, Lessee may, within 10 days thereafter, give writte n notice to Lessor of Lessee's commitment to pay the cost of the remediation of such Hazardous Substance Condition . Lessee shall provide Lessor with satisfactory assurance of the availability of said funds within 30 days following such commitment . In such event , this Lease shall continue in full force and effect, and Lessee shall proceed to make such remediation as soon as reasonabl y possible . If Lessee does not give such notice and provide the required assurance of available funds within the time provided, thi s Lease shall terminate as of the date specified in Lessor's notice of termination . PAGE 3 B 5-16 .73 INITIALS INITIAL S ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5105E ATTACHMENT 4 6 .3 Lessee's Compliance with Applicable Requirements .Except as otherwise provided in this Lease, Lesse e shall, at Lessee's sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, withou t regard to whether such Requirements are now in effect or become effective after the Start Date . Lessee shall, within 10 days afte r receipt of Lessor's written request, provide Lessor with copies of all permits and other documents, and other information evidencin g Lessee's compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor i n writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or repor t pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements . Likewise, Lessee shal l immediately give written notice to Lessor of : (i) any water damage to the Premises and any suspected seepage, pooling, dampnes s or other condition conducive to the production of mold ; or (ii) any mustiness or other odors that might indicate the presence of mol d in the Premises . 6 .4 Inspection ;Compliance .Lessor and Lessor's "Lender" (as defined in Paragraph 30) and consultants shal l have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonabl e notice, for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease . The cost of any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or Hazardous Substance Conditio n (see paragraph 9 .1) is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority . In suc h case, Lessee shall upon request reimburse Lessor for the cost of such inspection, so long as such inspection is reasonably relate d to the violation or contamination . In addition, Lessee shall provide copies of all relevant material safety data sheets (MSDS) t o Lessor within 10 days of the receipt of a written request therefor . 7 .Maintenance; Repairs, Utility Installations ; Trade Fixtures and Alterations . 7 .1 Lessee's Obligations. (a)In General .Subject to the provisions of Paragraph 2.2(Condition), 2 .3 (Compliance), 6 .3 (Lessee's Complianc e with Applicable Requirements), 7 .2 (Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, a t Lessee's sole expense, keep the Premises, Utility Installations (intended for Lessee's exclusive use, no matter where located), an d Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means o f repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a resul t of Lessee's use, any prior use, the elements or the age of such portion of the Premises), including, but not limited to, all equipmen t or facilities, such as parking lots, signs, sidewalks and parkways located in, on, or adjacent to the Premises . Lessee, in keeping th e Premises in good order, condition and repair, shall exercise and perform good maintenance practices . Lessee's obligations shal l include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a par t thereof in good order, condition and state of repair . Lessee shall, during the term of this Lease, keep the exterior appearance of th e Premises in a first-class condition (including, e .g . graffiti removal) consistent with the exterior appearance of other similar facilities o f comparable age and size in the vicinity . (b)[intentionally omitted ] (c)Failure to Perform . If Lessee fails to perform Lessee's obligations under this Paragraph 7 .1, Lessor may ente r upon the Premises after 10 days' prior written notice to Lessee (except in the case of an emergency, in which case no notice shal l be required), perform such obligations on Lessee's behalf, and put the Premises in good order, condition and repair, and Lesse e shall promptly pay to Lessor a sum equal to 115% of the cost thereof . (d)[intentionally omitted ] 7 .2 Lessor's Obligations .Subject to the provisions of Paragraphs 2 .2(Condition), 2 .3 (Compliance), 9 (Damage o r Destruction), and 14 (Condemnation), it is intended by the Parties hereto that Lessor have no obligation, in any manner whatsoever , to repair and maintain the Premises, or the equipment therein, all of which obligations are intended to be that of the Lessee, othe r than as provided in the PSA Agreements . It is the intention of the Parties that the terms of this Lease govern the respectiv e obligations of the Parties as to maintenance and repair of the Premises, and they expressly waive the benefit of any statute now o r hereafter in effect to the extent it is inconsistent with the terms of this Lease . 7 .3 Utility Installations ; Trade Fixtures ;Alterations . (a)Definitions . The term "Utility Installations" refers to all floor and window coverings, air and/or vacuum lines , power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment , plumbing, and fencing in or on the Premises . The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can b e removed without doing material damage to the Premises, including parking meter heads . The term "Alterations" shall mean an y modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion . "Lessee Owned Alterations and/or Utility Installations" are defined as Alterations and/or Utility Installations made by Lessee that are not ye t owned by Lessor pursuant to Paragraph 7 .4(a). (b)No Consent. Lessee shall be entitled to make any Alterations or Utility Installations to the Premises withou t Lessor's prior written consent . (c)Liens ;Bonds .Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have bee n furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises or any interest therein . Lessee shall give Lessor not less than 10 days notice prior to the commencemen t of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility . If Lessee shall contes t the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and th e Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before th e enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal to 150% of the amount of suc h contested lien, claim or demand, indemnifying Lessor against liability for the same . If Lessor elects to participate in any such action , Lessee shall pay Lessor's attorneys' fees and costs. 7 .4 Ownership ; Removal ; Surrender; and Restoration . PAGE 4 --B-5-16 .7 4 INITIALS INITIAL S ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05E ATTACHMENT 4 (a)Ownership .Subject to Lessor's right to require removal or elect ownership as hereinafter provided, al l Alterations and Utility Installations made by Lessee shall be the property of Lessee . Other than the parking meter heads referred t o in paragraph 7 .4(b) hereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination of this Lease , become the property of Lessor and be surrendered by Lessee with the Premises . (b)Removal of Parking Meter Heads .At the end of the term of this Lease, Lessee shall remove all parking mete r heads from the Premises, and such parking meter heads shall remain the property of Lessee . (c)Surrender; Restoration .Lessee shall surrender the Premises by the Expiration Date or any earlier terminatio n date in the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear . "Ordinary wea r and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice . Lesse e shall completely remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee to th e amounts required by applicable law (except for Hazardous Substances which were deposited via underground migration from area s outside of the Premises, or if applicable, the Premises). Trade Fixtures shall remain the property of Lessee and shall be removed b y Lessee . Any personal property of Lessee not removed on or before the Expiration Date or any earlier termination date shall b e deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire . The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7 .4(c) without the express written consent of Lessor shal l constitute a holdover under the provisions of Paragraph 26 below . 8.Insurance ; Indemnity . 8 .1 Payment For Insurance . Lessee shall pay directly for all insurance required under Paragraph 8 . 8 .2 Liability Insurance . (a)Carried by Lessee . Lessee shall obtain and keep in force a Commercial General Liability policy of insuranc e protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage base d upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto . Suc h insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $3,000,000 .00 per occurrenc e with an annual aggregate of not less than $5,000,000 .00 . Lessee shall add Lessor as an additional insured by means of a n endorsement at least as broad as the Insurance Service Organization's "Additional Insured-Managers or Lessors of Premises " Endorsement . The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shal l include coverage for liability assumed under this Lease as an "insured contract" for the performance of Lessee's indemnit y obligations under this Lease . The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of an y obligation hereunder . Lessee shall provide an endorsement on its liability policy(ies) which provides that its insurance shall b e primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insuranc e only . (b)Carried by Lessor. Lessor may maintain such liability insurance as its deems appropriate and such insuranc e shall be in addition to, and not in lieu of, the insurance required to be maintained by Lessee . Lessee shall not be named as a n additional insured therein . 8.3 Property Insurance - Building, Improvements and Rental Value . (a)Building and Improvements.The Insuring Party shall obtain and keep in force a policy or policies in the nam e of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the Premises . The amount of such insurance shall be equal to the full insurable replacement cost of the Premises [City is confirming this amount], as the same shall exist from time to time, or the amount required by any Lender, but in no event more than the commercially reasonable an d available insurable value thereof. If Lessor is the Insuring Party, however, Lessee Owned Alterations and Utility Installations, Trad e Fixtures, and Lessee's personal property shall be insured by Lessee under Paragraph 8 .4 rather than by Lessor . If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (excep t the perils of earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicabl e Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver o f subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of no t less than the adjusted U .S . Department of Labor Consumer Price Index for All Consumers for the city nearest where the Premise s are located . If such insurance coverage has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence , and Lessee shall be liable for such deductible amount in the event of an Insured Loss . The obligation to carry insurance unde r Sections 8 .3 and 8 .4 may be met with self-insurance . (b)Rental Value.[INTENTIONALLY OMITTED]. (c)Adjacent Premises . If the Premises are part of a larger building, or of a group of buildings owned by Lesso r which are adjacent to the Premises, the Lessee shall pay for any increase in the premiums for the property insurance of suc h building or buildings if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises . 8 .4 Lessee's Property ; Business Interruption Insurance . (a)Property Damage .[INTENTIONALLY OMITTED]. (b)Business Interruption .[INTENTIONALLY OMITTED]. (c)No Representation of Adequate Coverage .Lessor makes no representation that the limits or forms o f coverage of insurance specified herein are adequate to cover Lessee's property, business operations or obligations under thi s Lease . 8 .5 Insurance Policies . Insurance required herein shall be by companies duly licensed or admitted to transac t business in the state where the Premises are located, and maintaining during the policy term a "General Policyholders Rating" of a t least A-, VII VI, as set forth in the most current issue of "Best's Insurance Guide", or such other rating as may be required by a PAGE 5 -B5-16 .7 5 INITIALS INITIALS ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05E ATTACHMENT 4 Lender . Lessee shall not do or permit to be done anything which invalidates the required insurance policies . Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates evidencing the existence and amounts o fthe required insurance . No such policy shall be cancelable or subject to modification except after 30 days prior written notice t oLessor. Lessee shall, at least 10 days prior to the expiration of such policies, furnish Lessor with evidence of renewals or "insuranc e binders" evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shal lbe payable by Lessee to Lessor upon demand . Such policies shall be for a term of at least one year, or the length of the remainin gterm of this Lease, whichever is less . If either Party shall fail to procure and maintain the insurance required to be carried by it, th eother Party may, but shall not be required to, procure and maintain the same . 8 .6 Waiver of Subrogation .Without affecting any other rights or remedies, Lessee and Lessor each hereb y release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its propert yarising out of or incident to the perils required to be insured against herein . The effect of such releases and waivers is not limited bythe amount of insurance carried or required, or by any deductibles applicable hereto . The Parties agree to have their respectiv e property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as th ecase may be, so long as the insurance is not invalidated thereby . 8 .7 Indemnity . Except for Lessor's negligence or willful misconduct, Lessee shall indemnify, protect, defend an d hold harmless the Premises, Lessor and its agents, Lessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or liabilitie sarising out of, involving, or in connection with, the use and/or occupancy of the Premises by Lessee other than as expressl yprovided in the PSA Agreements . If any action or proceeding is brought against Lessor by reason of any of the foregoing matters , Lessee shall upon notice defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shal lcooperate with Lessee in such defense . Lessor need not have first paid any such claim in order to be defended or indemnified . 8 .8 Exemption of Lessor and its Agents from Liability .Notwithstanding the negligence or breach of this Leas e by Lessor or its agents, neither Lessor nor its agents shall be liable under any circumstances for : (i) injury or damage to the perso nor goods, wares, merchandise or other property of Lessee, Lessee's employees, contractors, invitees, customers, or any othe r person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water o r rain, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises, or from othe r sources or places, (ii) any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or it s agents to enforce the provisions of any other lease in the Project, or (iii) injury to Lessee's business or for any loss of income o rprofit therefrom . Instead, it is intended that Lessee's sole recourse in the event of such damages or injury be to file a claim on th e insurance policy(ies) that Lessee is required to maintain pursuant to the provisions of paragraph 8 . 8 .9 Failure to Provide Insurance. Lessee acknowledges that any failure on its part to obtain or maintain th einsurance required herein will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, th eextent of which will be extremely difficult to ascertain . Accordingly, for any month or portion thereof that Lessee does not maintai n the required insurance and/or does not provide Lessor with the required binders or certificates evidencing the existence of th e required insurance, the Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amoun tequal to 10% of the then existing Base Rent or $100, whichever is greater . The parties agree that such increase in Base Ren t represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee's failure t omaintain the required insurance . Such increase in Base Rent shall in no event constitute a waiver of Lessee's Default or Breach wit hrespect to the failure to maintain such insurance, prevent the exercise of any of the other rights and remedies granted hereunder ,nor relieve Lessee of its obligation to maintain the insurance specified in this Lease . 9 .Damage or Destruction. 9 .1 Definitions . (a)"Premises Partial Damage"shall mean damage or destruction to the improvements on the Premises, othe r than Lessee Owned Alterations and Utility Installations, which can reasonably be repaired in 2 months or less from the date of th edamage or destruction . Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whethe ror not the damage is Partial or Total . (b)"Premises Total Destruction" shall mean damage or destruction to the Premises, other than Lessee Owne d Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 2 months or less from the date of th edamage or destruction . Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whethe ror not the damage is Partial or Total . (c)"Insured Loss" shall mean damage or destruction to improvements on the Premises, other than Lessee Owne dAlterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insuranc edescribed in Paragraph 8 .3(a), irrespective of any deductible amounts or coverage limits involved . (d)"Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Lessor at the time o f the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required b ythe operation of Applicable Requirements, and without deduction for depreciation . (e)"Hazardous Substance Condition"shall mean the occurrence or discovery of a condition involving th e presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6 .2, in, on, or under the Premises whic hrequires repair, remediation, or restoration . 9 .2 Partial Damage - Insured Loss . If a Premises Partial Damage that is an Insured Loss occurs, then Lesse e shall, at Lessee's expense, repair such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utilit yInstallations) as soon as reasonably possible and this Lease shall continue in full force and effec t 9 .3 Partial Damage - Uninsured Loss . If a Premises Partial Damage that is not an Insured Loss occurs, unles s caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense), Lessee ma yeither: (i) repair such damage as soon as reasonably possible at Lessee's expense, in which event this Lease shall continue in ful l PAGE 6 -R5-16 .7 6 INITIALS INITIALS©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05 E ATTACHMENT 4 force and effect, or (ii) terminate this Lease by giving written notice to Lessor within 30 days after receipt by Lessee of knowledge o fthe occurrence of such damage . Such termination shall be effective 60 days following ,the date of such notice . In the event Lesse e elects to terminate this Lease, Lessor shall have the right within 10 days after receipt of the termination notice to give written notic eto Lessee of Lessor's commitment to pay for the repair of such damage without reimbursement from Lessee . Lessor shall provideLessee with said funds or satisfactory assurance thereof within 30 days after making such commitment . In such event this Lease shall continue in full force and effect, and Lessee shall proceed to make such repairs as soon as reasonably possible after th erequired funds are available . If Lessor does not make the required commitment, this Lease shall terminate as of the date specified i nthe termination notice . 9 .4 Total Destruction . Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, thi sLease shall terminate 60 days following such Destruction . If the damage or destruction was caused by the gross negligence or willfu lmisconduct of Lessee, Lessor shall have the right to recover Lessor's damages from Lessee, except as provided in Paragraph 8 .6 . 9 .5 [intentionally omitted] 9 .6 Abatement of Rent ; Lessee's Remedies. (a)Abatement .;Right to Action . In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the perio d required for the repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Lessee's us eof the Premises is impaired . (b)Remedies .If Lessor is obligated to repair or restore the Premises and does not commence, in a substantial an d meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Lessee may, at any time prior to th ecommencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, o fLessee's election to terminate this Lease on a date not less than 60 days following the giving of such notice . If Lessee gives such notice and such repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as of the date specifie din said notice . If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect . "Commence" shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of th eactual work on the Premises, whichever first occurs . 9 .7 Termination ; Advance Payments .Upon termination of this Lease pursuant to Paragraph 6 .2(g) or Paragrap h 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee t oLessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit as has not been, or is not then required t obe, used by Lessor. 10.Real Property Taxes . 10 .1 Definition . As used herein, the term "Real Property Taxes"shall include any form of assessment ; real estate , general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes);improvement bond ; and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Premises o rthe Project, Lessor's right to other income therefrom, and/or Lessor's business of leasing, by any authority having the direct o rindirect power to tax and where the funds are generated with reference to the Building address and where the proceeds s o generated are to be applied by the city, county or other local taxing authority of a jurisdiction within which the Premises are located . Real Property Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein : (i) imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises, and (ii) levie dor assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease . 10 .2 Payment of Taxes .If the Premises are or become exempt from Real Property Taxes because they are lease dby Lessee, a governmental agency, then Lessee shall have no obligation to pay any amount for Real Property Tax installments .However, if the Premises are not exempt from such taxes, then Lessor shall pay them .. 10 .3 Joint Assessment.. 10 .4 Personal Property Taxes.Lessee shall pay, prior to delinquency, all taxes assessed against and levied upo nTrade Fixtures, and all personal property of Lessee . When possible, Lessee shall cause its Trade Fixtures, and all other persona l property to be assessed and billed separately from the real property of Lessor . If any of Lessee's said property shall be assesse dwith Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee's property within 10 days after receipt of awritten statement setting forth the taxes applicable to Lessee's property . 11.Utilities and Services .Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal an dother utilities and services supplied to the Premises, together with any taxes thereon . There shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility o rservice due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor's reasonable control or i ncooperation with governmental request or directions . 12.Assignment and Subletting . 12 .1 Lessor's Consent Required . (a)Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively,"assig norassignment")or sublet all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior written consent . (b)[intentionally omitted] (c)[intentionally omitted ] (d)An assignment or subletting without consent shall, at Lessor's option, be a Default curable after notice pe rParagraph 13 .1(c), or a noncurable Breach without the necessity of any notice and grace period . If Lessor elects to treat suc h PAGE 7 ---5-16 .7 7 INITIALS INITIALS©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05E ATTACF#IVIENT 4 unapproved assignment or subletting as a noncurable Breach, Lessor may either : (i) terminate this Lease, or (ii) upon 30 day swritten notice, increase the monthly Base Rent to $ (e)Lessee's remedy for any breach of Paragraph 12 .1 by Lessor shall be limited to compensatory damages and/o rinjunctive relief . (f)Lessor may reasonably withhold consent to a proposed assignment or subletting if Lessee is in Default at th etime consent is requested . (g)[intentionally omitted ] 12 .2 Terms and Conditions Applicable to Assignment and Subletting . (a)Regardless of Lessor's consent, no assignment or subletting shall : (i) be effective without the express writte n assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligation s hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to b eperformed by Lessee . (b)Lessor may accept Rent or performance of Lessee's obligations from any person other than Lessee pendin gapproval or disapproval of an assignment . Neither a delay in the approval or disapproval of such assignment nor the acceptance o fRent or performance shall constitute a waiver or estoppel of Lessor's right to exercise its remedies for Lessee's Default or Breach . (c)Lessor's consent to any assignment or subletting shall not constitute a consent to any subsequent assignmen tor subletting . (d)In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantor s or anyone else responsible for the performance of Lessee's obligations under this Lease, including any assignee or sublessee , without first exhausting Lessor's remedies against any other person or entity responsible therefor to Lessor, or any security held b yLessor. (e)Each request for consent to an assignment or subletting shall be in writing, accompanied by informatio n relevant to Lessor's determination as to the financial and operational responsibility and appropriateness of the proposed assignee o r sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a fee o f$500 as consideration for Lessor's considering and processing said request. Lessee agrees to provide Lessor with such other o radditional information and/or documentation as may be reasonably requested . (See also Paragraph 36 ) (f)Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering int osuch sublease, or entering into possession of the Premises or any portion thereof, be deemed to have assumed and agreed t oconform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lesse eduring the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of a nassignment or sublease to which Lessor has specifically consented to in writing . (g)Lessor's consent to any assignment or subletting shall not transfer to the assignee or sublessee any Optio n granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing . (See Paragrap h39.2) 12 .3 Additional Terms and Conditions Applicable to Subletting .The following terms and conditions shall appl y to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Leas ewhether or not expressly incorporated therein : (a)Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all Rent payable on any sublease, an dLessor may collect such Rent and apply same toward Lessee's obligations under this Lease ; provided, however, that until a Breac hshall occur in the performance of Lessee's obligations, Lessee may collect said Rent . In the event that the amount collected b yLessor exceeds Lessee's then outstanding obligations any such excess shall be refunded to Lessee . Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee fo rany failure of Lessee to perform and comply with any of Lessee's obligations to such sublessee . Lessee hereby irrevocabl yauthorizes and directs any such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in th eperformance of Lessee's obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease . Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire a sto whether such Breach exists, notwithstanding any claim from Lessee to the contrary . (b)In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn to Lessor, in whic hevent Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to th eexpiration of such sublease ; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by suc hsublessee to such sublessor or for any prior Defaults or Breaches of such sublessor . (c)Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor . (d)No sublessee shall further assign or sublet all or any part of the Premises without Lessor's prior written consent . (e)Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have th eright to cure the Default of Lessee within the grace period, if any, specified in such notice . The sublessee shall have a right o freimbursement and offset from and against Lessee for any such Defaults cured by the sublessee . 13 .Default ; Breach ; Remedies . 13 .1 Default ;Breach .A "Default" is defined as a failure by the Lessee to comply with or perform any of the terms ,covenants, conditions or Rules and Regulations under this Lease . A "Breach"is defined as the occurrence of one or more of thefollowing Defaults, and the failure of Lessee to cure such Default within any applicable grace period : PAGE 8 -B5-16 .7 8INITIALSINITIALS©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05 E ATTACHMENT 4 (a)The abandonment of the Premises ; or the vacating of the Premises without providing a commerciall y reasonable level of security, or where the coverage of the property insurance described in Paragraph 8 .3 is jeopardized as a resul tthereof, or without providing reasonable assurances to minimize potential vandalism . (b)The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lesse e hereunder, whether to Lessor or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfil lany obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3business days following written notice to Lessee . (c)The commission of waste, act or acts constituting public or private nuisance, and/or an illegal activity on th ePremises by Lessee, where such actions continue for a period of 3 business days following written notice to Lessee . (d)The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements , (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42, (viii ) material safety data sheets (MSDS), or (ix) any other documentation or information which Lessor may reasonably require of Lesse eunder the terms of this Lease, where any such failure continues for a period of 10 days following written notice to Lessee . (e)A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopte dunder Paragraph 40 hereof, other than those described in subparagraphs 13 .1(a), (b), (c) or (d), above, where such Defaul tcontinues for a period of 30 days after written notice ; provided, however, that if the nature of Lessee's Default is such that more tha n30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within sai d30 day period and thereafter diligently prosecutes such cure to completion . (f)The occurrence of any of the following events : (i) the making of any general arrangement or assignment for th ebenefit of creditors ; (ii) becoming a "debtor"as defined in 11 U .S .C . §101 or any successor statute thereto (unless, in the case of apetition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possessio n of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where possession is not restore dto Lessee within 30 days ; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets located a tthe Premises or of Lessee's interest in this Lease, where such seizure is not discharged within 30 days ; provided, however, in th e event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and no taffect the validity of the remaining provisions . (g)The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false . (h)[intentionally omitted ] 13 .2 Remedies .If Lessee fails to perform any of its affirmative duties or obligations, within 10 days after writte n notice (or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee's behalf , including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits o rapprovals. Lessee shall pay to Lessor an amount equal to 120% of the costs and expenses incurred by Lessor in such performanc eupon receipt of an invoice therefor . In the event of a Breach, Lessor may, with or without further notice or demand, and withou tlimiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach : (a)Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shal lterminate and Lessee shall immediately surrender possession to Lessor . In such event Lessor shall be entitled to recover fro mLessee: (i) the unpaid Rent which had been earned at the time of termination ; (ii) the worth at the time of award of the amount b ywhich the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such renta lloss that the Lessee proves could have been reasonably avoided ; (iii) the worth at the time of award of the amount by which th e unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves coul dbe reasonably avoided ; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by th e Lessee's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to resul ttherefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessar yrenovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Lessor i nconnection with this Lease applicable to the unexpired term of this Lease . The worth at the time of award of the amount referred t o in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of th e Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent . Efforts by Lessor to mitigate damages caused by Lessee's Breach of this Lease shall not waive Lessor's right to recover damages under Paragrap h12. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recove rin such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or an ypart thereof in a separate suit . If a notice and grace period required under Paragraph 13 .1 was not previously given, a notice to pa y rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required b yParagraph 13 .1 . In such case, the applicable grace period required by Paragraph 13 .1 and the unlawful detainer statute shall ru n concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both a nunlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute . (b)Continue the Lease and Lessee's right to possession and recover the Rent as it becomes due, in which even tLessee may sublet or assign, subject only to reasonable limitations . Acts of maintenance, efforts to relet, and/or the appointment o f a receiver to protect the Lessor's interests, shall not constitute a termination of the Lessee's right to possession . (c)Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein th ePremises are located . The expiration or termination of this Lease and/or the termination of Lessee's right to possession shall no t relieve Lessee from liability under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereo for by reason of Lessee's occupancy of the Premises . 13 .3 Inducement Recapture .Any agreement for free or abated rent or other charges, or for the giving or paying b yLessor to or for Lessee of any cash or other bonus, inducement or consideration for Lessee's entering into this Lease, all of whic hconcessions are hereinafter referred to as "Inducement Provisions," shall be deemed conditioned upon Lessee's full and faithfu l PAGE 9 -16 .7 9 INITIALS INITIAL S©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05E ATTACHMENT 4 performance of all of the terms, covenants and conditions of this Lease . Upon Breach of this Lease by Lessee, any suc h Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, othe r charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an inducement Provision shal l be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee . Th e acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waive r by Lessor of the provisions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance . 13 .4 (intentionally omitted] 13 .5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, whe n due as to scheduled payments (such as Base Rent) or within 30 days following the date on which it was due for non-schedule d payment, shall bear interest from the date when due, as to scheduled payments, or the 31st day after it was due as to non - scheduled payments . The interest ( "Interest") charged shall be computed at the rate of 10% per annum but shall not exceed th e maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13 .4 . 13 .6 Breach by Lessor . (a)Notice of Breach .Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonabl etime to perform an obligation required to be performed by Lessor . For purposes of this Paragraph, a reasonable time shall in n o event be less than 10 days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed ; provided, however , that if the nature of Lessor's obligation is such that more than 10 days are reasonably required for its performance, then Lessor shal l not be in breach if performance is commenced within such 10 day period and thereafter diligently pursued to completion . (b)Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breac h within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, the n Lessee may elect to cure said breach at Lessee's expense and offset from Rent the actual and reasonable cost to perform suc h cure, or Lessee may elect to cure such breach at Lessee's expenses and pursue an action at law or in equity against Lesso r including without limitation an action seeking specific performance of this Lease Lessee shall document the cost of said cure an d supply said documentation to Lessor . 14.Condemnation .If the Premises or any portion thereof are taken under the power of eminent domain or sol d under the threat of the exercise of said power (collectively "Condemnation"),this Lease shall terminate as to the part taken as o f the date the condemning authority takes title or possession, whichever first occurs . If more than 25% of that portion of the Premises , is taken by Condemnation, Lessee may, at Lessee's option, to be exercised in writing within 10 days after Lessor shall have give n Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall hav e taken possession) terminate this Lease as of the date the condemning authority takes such possession . If Lessee does no t terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of th e Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused b y such Condemnation . Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made a s compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages ; provided, however , that Lessee shall be entitled to any compensation paid by the condemnor for Lessee's relocation expenses, loss of busines s goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of thi sParagraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall b e considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor . In th e event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused b y such Condemnation . 15.Brokerage Fees . 15 .1 Additional Commission .. 15 .2 Assumption of Obligations .Any buyer or transferee of Lessor's interest in this Lease shall be deemed to have assumed Lessor's obligation hereunder . Brokers shall be third party beneficiaries of the provisions of Paragraphs 1 .9, 15, 22 and31. If Lessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this Lease when due, then suc hamounts shall accrue Interest . In addition, if Lessor fails to pay any amounts to Lessee's Broker when due, Lessee's Broker ma y send written notice to Lessor and Lessee of such failure and if Lessor fails to pay such amounts within 10 days after said notice , Lessee shall pay said monies to its Broker and offset such amounts against Rent. In addition, Lessee's Broker shall be deemed to be a third party beneficiary of any commission agreement entered into by and/or between Lessor and Lessor's Broker for the limite dpurpose of collecting any brokerage fee owed . 15 .3 Representations and Indemnities of Broker Relationships .Lessee and Lessor each represent and warran t to the other that it has had no dealings with any person, firm, broker or finder in connection with this Lease, and that no one i s entitled to any commission or finder's fee in connection herewith . Lessee and Lessor do each hereby agree to indemnify, protect , defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any suc h unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs ,expenses, attorneys' fees reasonably incurred with respect thereto . 16.Estoppel Certificates . (a)Each Party (as "Responding Party") shall within 10 days after written notice from the other Party (th e"Requesting Party") execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the the nmost current "Estoppel Certificate" form published by the AIR Commercial Real Estate Association, plus such additiona l information, confirmation and/or statements as may be reasonably requested by the Requesting Party . (b)If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, th e Requesting Party may execute an Estoppel Certificate stating that : (i) the Lease is in full force and effect without modification excep t as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party's performance, and (iii) if PAGE 10 1.5-16 .8 0 INITIALS INITIALS ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05E ATTACHMENT 4 Lessor is the Requesting Party, not more than one month's rent has been paid in advance . Prospective purchasers an d encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped fro m denying the truth of the facts contained in said Certificate . (c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shal ldeliver to any potential lender or purchaser designated by Lessor such financial statements as may be reasonably required by suc hlender or purchaser, including but not limited to Lessee's financial statements for the past 3 years . All such financial statements shal l be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth . 17 . Definition of Lessor . The term "Lessor" as used herein shall mean the owner or owners at the time i n question of the fee title to the Premises, or, if this is a sublease, of the Lessee's interest in the prior lease . In the event of a transfe r of Lessor's title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) an yunused Security Deposit held by Lessor . Upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, th e prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to b eperformed by the Lessor . Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the Lesso rshall be binding only upon the Lessor as hereinabove defined . 18 .Severability.The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction , shall in no way affect the validity of any other provision hereof . 19 .Days .Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall mea n and refer to calendar days . 20 . Limitation on Liability.The obligations of Lessor under this Lease shall not constitute personal obligations o f Lessor or its partners, members, directors, officers or shareholders, and Lessee shall look to the Premises, and to no other assets o f Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor's partners , members, directors, officers or shareholders, or any of their personal assets for such satisfaction . 21 .Time of Essence .Time is of the essence with respect to the performance of all obligations to be performed o robserved by the Parties under this Lease . 22 . No Prior or Other Agreements ; Broker Disclaimer .This Lease contains all agreements between the Partie s with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective . Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation a s to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the use, nature, quality an dcharacter of the Premises . Brokers have no responsibility with respect thereto or with respect to any default or breach hereof b yeither Party . 23.Notices . 23.1 Notice Requirements.All notices required or permitted by this Lease or applicable law shall be in writing an dmay be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U .S . Postal Service Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manne rspecified in this Paragraph 23 . The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address fo rdelivery or mailing of notices . Either Party may by written notice to the other specify a different address for notice, except that upo n Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for notice . A copy of all notices t o Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafte rdesignate in writing . 23 .2 Date of Notice . Any notice sent by registered or certified mail, return receipt requested, shall be deemed give n on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon . If sent by regular mail th e notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid . Notices delivered by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed given 24 hours afte rdelivery of the same to the Postal Service or courier . Notices transmitted by facsimile transmission or similar means shall b e deemed delivered upon telephone confirmation of receipt (confirmation report from fax machine is sufficient), provided a copy is als odelivered via delivery or mail . If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the nex tbusiness day . 24 .Waivers . (a)No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same o rof any other term, covenant or condition hereof . Lessor's consent to, or approval of, any act shall not be deemed to rende r unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or be construed as th ebasis of an estoppel to enforce the provision or provisions of this Lease requiring such consent . (b)The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements o r conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment . (c)THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO AL L MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO TH E EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE . 25 .[intentionally omitted] 26 .No Right To Holdover.Lessee has no right to retain possession of the Premises or any part thereof beyon d the expiration or termination of this Lease . In the event that Lessee holds over, then the Base Rent shall be increased to $_of th e PAGE 11 --B5-16 .8 1 INITIALS INITIALS©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05E ATTACHMENT 4 Base Rent applicable immediately preceding the expiration or termination . Nothing contained herein shall be construed as consen t by Lessor to any holding over by Lessee . 27.Cumulative Remedies .No remedy or election hereunder shall be deemed exclusive but shall, whereve r possible, be cumulative with all other remedies at law or in equity . 28.Covenants and Conditions ; Construction of Agreement.All provisions of this Lease to be observed o r performed by Lessee are both covenants and conditions . In construing this Lease, all headings and titles are for the convenience o f the Parties only and shall not be considered a part of this Lease . Whenever required by the context, the singular shall include th e plural and vice versa . This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meanin g as a whole, as if both Parties had prepared it . 29.Binding Effect ; Choice of Law .This Lease shall be binding upon the Parties, their personal representatives , successors and assigns and be governed by the laws of the State in which the Premises are located . Any litigation between th e Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located . 30.Subordination ; Attornment; Non-Disturbance . 30 .1 Subordination .This Lease and any Option granted hereby shall be subject and subordinate to any groun d lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device"),now or hereafter place d upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extension s thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as "Lender") shall have n o liability or obligation to perform any of the obligations of Lessor under this Lease . Any Lender may elect to have this Lease and/o r any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon thi s Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation o r recordation thereof. 30 .2 Attornment . In the event that Lessor transfers title to the Premises, or the Premises are acquired by anothe r upon the foreclosure or termination of a Security Devise to which this Lease is subordinated (i) Lessee shall, have the right t o terminate this Lease or, at its election, subject to the non-disturbance provisions of Paragraph 30 .3, attorn to such new owner, an d upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for th e remainder of the term hereof, or, at the election of the new owner, this Lease will automatically become a new lease betwee n Lessee and such new owner, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder (but not of it s obligations under the PSA Agreements) and such new owner shall assume all of Lessor's obligations, except that such new owne r shall not : (a) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership ; (b) be subject to any offsets or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of mor e than one month's rent, or (d) be liable for the return of any security deposit paid to any prior lessor which was not paid or credited t o such new owner. 30 .3 Non-Disturbance .With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee's subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a "Non - Disturbance Agreement" )from the Lender which Non-Disturbance Agreement provides that Lessee's possession of the Premises , and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof an d attorns to the record owner of the Premises . Further, within 60 days after the execution of this Lease, Lessor shall, if requested b y Lessee, use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Securit y Device which is secured by the Premises . In the event that Lessor is unable to provide the Non-Disturbance Agreement within sai d 60 days, then Lessee may, at Lessee's option, directly contact Lender and attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement . 30 .4 Self-Executing .The agreements contained in this Paragraph 30 shall be effective without the execution of an y further documents ; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing o r refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separatel y document any subordination, attornment and/or Non-Disturbance Agreement provided for herein . 31.Attorneys' Fees .If any Party or Broker brings an action or proceeding involving the Premises whether founde d in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action , or appeal thereon, shall be entitled to reasonable attorneys' fees . Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment . The term, "Prevailing Party" shal l include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether b y compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fee s award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fee s reasonably incurred . In addition, Lessor shall be entitled to attorneys' fees, costs and expenses incurred in the preparation an d service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced i n connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence for such services an d consultation). 32.Lessor's Access ; Showing Premises; Repairs.Lessor and Lessor's agents shall have the right to enter th e Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable prior notice for the purpos e of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements o r additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services , pipes and conduits through the Premises and/or other premises as long as there is no material adverse effect to Lessee's use of th e Premises . All such activities shall be without abatement of rent or liability to Lessee . 33.Auctions . Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises withou t Lessor's prior written consent . Lessor shall not be obligated to exercise any standard of reasonableness in determining whether t o permit an auction . PAGE 12 -16 .8 2 INITIALS INITIALS ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05E ATTACHMENT 4 34 .Signs . Lessor may place on the Premises any sign without Lessor's prior written consent so long as any suc h sign complies with all Applicable Requirements . 35 .Termination ;Merger .Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrende r of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shal l automatically terminate any sublease or lesser estate in the Premises ; provided, however, that Lessor may elect to continue an y one or all existing subtenancies . Lessor's failure within 10 days following any such event to elect to the contrary by written notice t o the holder of any such lesser interest, shall constitute Lessor's election to have such event constitute the termination of suc h interest . 36 . Consents . Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to a n act by or for the other Party, such consent shall not be unreasonably withheld or delayed . Lessor's actual reasonable costs an d expenses (including but not limited to architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of , or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting o r the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentatio n therefor . Lessor's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach b y Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may b e otherwise specifically stated in writing by Lessor at the time of such consent . The failure to specify herein any particular condition t o Lessor's consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are the n reasonable with reference to the particular matter for which consent is being given . In the event that either Party disagrees with an y determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shal l furnish its reasons in writing and in reasonable detail within 10 business days following such request . 37 .[intentionally omitted] 38 . Quiet Possession .Subject to payment by Lessee of the Rent and performance of all of the covenants , conditions and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession an d quiet enjoyment of the Premises during the term hereof . 39 .[intentionally omitted] 40 .[intentionally omitted ] 41 . Security Measures .Lessee hereby acknowledges that the Rent payable to Lessor hereunder does not includ e the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same . Lesse e assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties . 42 . Reservations . Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder o f Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps an d restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of th e Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easemen t rights, dedication, map or restrictions . 43. Performance Under Protest .If at any time a dispute shall arise as to any amount or sum of money to be pai d by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall hav e the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall surviv e the right on the part of said Party to institute suit for recovery of such sum . If it shall be adjudged that there was no legal obligatio n on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof a s it was not legally required to pay . A Party who does not initiate suit for the recovery of sums paid "under protest" with 6 months shal l be deemed to have waived its right to protest such payment . 44 .Authority ; Multiple Parties ; Execution . (a)If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, eac h individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute an d deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence o f such authority . (b)If this Lease is executed by more than one person or entity as "Lessee", each such person or entity shall b e jointly and severally liable hereunder . It is agreed that any one of the named Lessees shall be empowered to execute an y amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the sam e as if all of the named Lessees had executed such document . (c)This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and al l of which together shall constitute one and the same instrument . 45 .Conflict. Any conflict between the printed provisions of this Lease and typewritten or handwritten provision s shall be controlled by the typewritten or handwritten provisions . 46 . Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shal l not be deemed an offer to lease to the other Party . This Lease is not intended to be binding until executed and delivered by al l Parties hereto . 47 .Amendments .This Lease may be modified only in writing, signed by the Parties in interest at the time of th e modification . As long as they do not materially change Lessee's obligations hereunder, Lessee agrees to make such reasonabl e non-monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of norma l financing or refinancing of the Premises . PAGE 13 B5-16 .8 3 INITIALS INITIAL S ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05E ATTACHMENT 4 48.Waiver of Jury Trial . THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY I N ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT . 49.Mediation and Arbitration of Disputes .An Addendum requiring the Mediation and/or the Arbitration of al l disputes between the Parties and/or Brokers arising out of this Lease "q is I]is not attached to this Lease . 50.Americans with Disabilities Act . Since compliance with the Americans with Disabilities Act (ADA) is dependent upon Lessee's specific use of the Premises, Lessor makes no warranty or representation as to whether or not th e Premises comply with ADA or any similar legislation . In the event that Lessee's use of the Premises requires modifications o r additions to the Premises in order to be in ADA compliance, Lessee agrees to make any such necessary modifications and/o r additions at Lessee's expense . LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISIO N CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSEN T THERETO . THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEAS E ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WIT H RESPECT TO THE PREMISES . ATTENTION :NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES O F THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES . THE PARTIES ARE URGED TO : 1.SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE . 2.RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF TH E PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO : THE POSSIBLE PRESENCE O F HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF TH E ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE . WARNING :IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS O F THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES I S LOCATED . The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures . Executed at : San Luis Obispo, CA Executed at : San Luis Obispo, CA On :On : By LESSOR :By LESSEE : SLO CHINATOWN, LLC,CITY OF SAN LUIS OBISPO , a California limited liability company a municipal corporation and charter city By :By : Name Printed : Thomas M . Copeland Name Printed : Title : Manager Title : By : Address : P .O . Box 12260 Name Printed : San Luis Obispo, CA 93406 Title : Telephone :(805) 593-0200 Address : Facsimile :(805) 593-0109 Federal ID No .Telephone :() Facsimile :() Federal ID No . NOTICE : These forms are often modified to meet changing requirements of law and industry needs . Always writ e or call to make sure you are utilizing the most current form : AIR Commercial Real Estate Association, 800 W 6th Street , Suite 800, Los Angeles, CA 90017 . Telephone No . (213) 687-8777 . Fax No .: (213) 687-8616 . © Copyright 2001 - By AIR Commercial Real Estate Association . All rights reserved . No part of these works may be reproduced in any form without permission in writing . PAGE 14 --5-16 .8 4 INITIALS INITIALS ©2001 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM MTN-5-5/05E Annual Revenue Comparison ATTACHMENT 5 Revenue Details Entitled Project Proposed Project From 2008 Analysis Proposed Project Differenc e Property Ta x Retail including hote l retail $26,900 .00 $26,700 .00 (200 .00 ) Office $3,000 .001 $ $ $(3,000 .00 ) $14,800 .00 $8,100 .0 0 Residential Hote l Restaurant In hote l Total Property Tax $ $49,100 .001 $49,100 .00 $ In hote l 93,800 .00 83,900 .00 (9,900 .00 ) Existing Property Ta x Net Property Tax Total $12, 500 .00 $14,600 .00 $2,100 .00 -- --81,300 .00 $73,800 .00 1 $(7,500 .00 ) Sales Ta x Retail including hote l retail I 1$111,500 .00 $----I--$30,200 .00 $35,100 .00 4,900 .00 ------- Hotel 114,400 .00 2,900 .00 Net sales tax, includin g transfer from othe r retailers $ Restaurant In hotel 4 $141,700 .0 0 106,300 .0 0 187,600 .0 0 Total Property and Sale s Tax Revenue -r--"--I - $185,900 .001 ! $(1,700 .00 ) In hote l 149,500 .0 0 112,100 .00 $5,800 .0 0 Total Sales Tax $ $ Transient Occupancy Ta x Hotel $426,700 .00 $316,300 .0 0 Total Property, Sales & TOT Revenue $614,300.00 I$502,200.0 0 Entitled Project (sf)Units Proposed Project (sf ) 51,150 ,50,84 0 5,63 0 19,161 16 15,35 0 85,430 1 78 85,43 0--- -----;------6,000 6,000--------1- -------- -- 167,371 157,620 Project Detail s Retai l Offic e Residentia l Hote l Restauran t Total ■.■$(110,400 .00 ) Units Summary (sf) (310 ) (9,751 ) (5,630 ) 32 (3,811 ) , 7 8- --- --i-- $(6,700 .00) B5-1 7